How Many Missed Payments Before Foreclosure in California?

Foreclosure is a legal process homeowners in California may face when struggling to meet mortgage obligations. This process follows stages, with California primarily utilizing a non-judicial foreclosure method. Understanding these stages and timelines is important for anyone navigating financial difficulties related to their home.

Early Stages: Missed Payments and Lender Communication

When a homeowner misses a mortgage payment, it marks the beginning of a pre-foreclosure period. Mortgage payments have a grace period, often around 10 to 15 days, before late fees are assessed. After one or two missed payments, lenders initiate communication, sending letters and making phone calls to the borrower to address the delinquency. This initial outreach aims to understand the homeowner’s financial situation and explore potential solutions.

California law, including the Homeowner Bill of Rights (HBOR), mandates specific actions lenders must take before formally beginning the foreclosure process. Lenders are required to contact the borrower by phone or in person at least 30 days before recording a Notice of Default. This contact assesses the borrower’s financial situation and discusses options to avoid foreclosure, such as loan modifications or repayment plans. Under federal law, a mortgage servicer cannot begin a foreclosure until the borrower is at least 120 days past due on payments. This 120-day period, approximately four missed payments, provides homeowners an opportunity to submit a loss mitigation application and work with their servicer to find an alternative to foreclosure.

Formal Foreclosure Begins: Notice of Default

The first step in California’s non-judicial foreclosure process is the recording of a Notice of Default (NOD). This public record is filed with the county recorder’s office. The NOD serves as notice that the borrower is delinquent on their mortgage payments and that the foreclosure process has begun. It specifies the nature of the default, such as the amount owed, including missed payments, late fees, and other associated costs.

Once the NOD is recorded, the mortgage servicer must send a copy to the borrower by certified mail within 10 business days. A mandatory 90-day waiting period then begins, during which the homeowner has the opportunity to “cure” the default. Curing the default involves paying the entire amount of missed payments, accrued late fees, and any foreclosure costs incurred by the lender. This period provides a window for homeowners to reinstate their loan and stop foreclosure proceedings. If the default is not cured within these 90 days, the lender can proceed to the next stage.

Moving Towards Sale: Notice of Sale

If the default is not resolved during the 90-day Notice of Default period, the lender can issue a Notice of Sale (NOS). This document announces that the property will be sold at a public auction. The NOS can only be issued after the 90-day period following the NOD has expired and the default remains uncured.

The Notice of Sale must contain information, including the date, time, and location of the public auction, and a description of the property. It must be published in a newspaper of general circulation in the county once a week for three consecutive weeks, with the first publication occurring at least 20 days before the sale date. The NOS must also be posted at the property and in a public place, such as a courthouse, at least 20 days before the scheduled sale. It must be mailed to the borrower and other interested parties at least 20 days prior to the sale. Homeowners retain the right to reinstate their loan by paying all arrears, fees, and costs up to five business days before the scheduled sale date.

The Foreclosure Sale and Post-Sale Actions

The final stage of the non-judicial foreclosure process culminates in a public auction, often conducted by a trustee. At this auction, the property is sold to the highest bidder. If no third-party bids are higher than the opening bid, which is the amount owed to the lender including costs, the property reverts to the lender and becomes a Real Estate Owned (REO) asset.

Following the sale, the trustee issues a Trustee’s Deed Upon Sale to the new owner, which is then recorded, transferring title. If the former homeowner does not voluntarily vacate the property, the new owner must initiate an eviction process. If former homeowners still occupy the property, the new owner must serve a three-day notice to quit. If the occupants do not leave, the new owner must file an unlawful detainer lawsuit in court. This judicial process can take several weeks to months to finalize, leading to a sheriff-enforced lockout if the court rules in favor of the new owner.