The non-judicial foreclosure process is used instead of filing a lawsuit in court to retrieve the amounts owed to a lender with a secured loan under a Deed of Trust. The process follows procedure as set forth in the Civil Code of California. Based on the code, there are specific time frames and the costs are limited by law. This makes the non-judicial foreclosure the best economical method for a lender.


1. Notice of Default / Reinstatement Period
Foreclosure proceedings start with a Notice of Default (NOD). The document is recorded at the request of the lender by the trustee and is recorded in the county in which the property is located. The recording of Notice of Default gives "Constructive Notice" to the public.

After the recording of the Notice of Default, in the state of California, the borrower and junior lien holders are given proper notification and the borrower has 90 days to bring their account current. This period is referred to as the Reinstatement Period. This time period may vary in other states.

2. Notice of Trustee Sale
If the borrower does not reinstate their account within the 90 day period, the lender will authorize and instruct the Trustee to record the Notice of Trustee Sale (NOS).

After 21 days of the recording of the NOS, a foreclosure sale can take place at public auction. The property may be sold to a third party bidder or revert back to the lender for a specified amount.

Bidders are required to bring cashier's checks or money orders to the sale in an amount equal to or higher than the lenders opening bid.  The auctioneer will qualify each bidder and the successful bidder will have to tender full payment at the sale.

The Notice of Trustee's Sale is recorded at the County Recorder's office in the County where the property is located. It contains the date, time and place where the auction will take place. This notice has to be published in an adjudicated newspaper in the city where the property is located. The NOS is also posted on the property as a requirement of law.

3. Disbursement of Funds
After the sale auction is completed and if the property sells to an outside third party bidder, all funds owed to the lender/beneficiary will be prepared for immediate payout.  If the property reverts to the lender/beneficiary at the sale, a Trustee's Deed Upon Sale will be issued and the lender will have ownership to the property securing the debt.

The following time-line is applicable for California Non-Judicial Foreclosures under a Deed of Trust. Foreclosures begin with the Trustor (borrower) not making the monthly payments to the Beneficiary (Lender), the first missed payment is technical default, but in practical terms, most Beneficiaries do not begin the process until the third payment is missed. If the Beneficiary cannot resolve the defaulted payment amount with the Trustor through Forbearance or other Loss Mitigation measures, the Beneficiary will instruct the Trustee to begin Foreclosure proceedings.

Day 1

Record Notice of Default

Within 10 business days

Mail and publish Notice of Default

Within 1 month

Mail Notice of Default

After 3 months

Set sale date

25 days before sale date

Send notice of sale to I.R.S. (when necessary)

Within 10 days from 1st publication

Send beneficiary request for property directions

14 days before sale date

Record Notice of Sale

7 days before sale date

If court action, 7day rule may apply

5 business days before sale date

Expiration of right to re-instate the loan

Sale date

A foreclosure loan most often means a refinance loan to prevent a foreclosure. While these loans work very well to stop foreclosure proceedings they can be very hard to get unless the homeowner has 30% or more equity in the home. Some homeowners may be looking for a personal or unsecured loan to stop a foreclosure. Unfortunately, unless their credit scores still remain very good these loans do not exist. When a loan cannot prevent a foreclosure many other options may save the house from auction.

Foreclosure is a very serious matter. You're now receiving all sorts of letters in the mail from different companies, all telling you that they can help you. They can be very confusing. If you've noticed, they want you to do one of the following. So let's go over each of them, one at a time.

Private Investors/Lenders:

They will tell you that they will bring your mortgage current and payoff all back fees to save your home, and they will, for a price of course.

In order for them to do that you must "Quick Deed" (sign over your home to them in their name). In turn they will lease your home back to you with 15-20% higher payments for 1, 2 or 3 years until they have made their investment back. Then they will agree to sign your home back to you. Sounds good so far, right? But here's the trick.

In the contract that you sign, somewhere in the fine print, it will say if the lessee (you) are 24 hours late with your monthly payment within the duration of your contract, then the lessee (you) must evacuate the premises. Usually within 5 - 7 days. Over 90% of homeowners that fall for this trick end up losing their homes. These investors all know that you've had payment problems in the past. That's why they prey on homeowners in your situation. Next thing you know your family is out on the street with no home or hope and the investor just tricked you out of your $150,000 home that cost them only $4,000 to $5,000. So PLEASE BEWARE.

New Loan:

You take out another loan. It sounds good on the surface but you might pay more in the long run in fees and higher interest rates. You have to start a new loan from the beginning. You may eventually lose all of your equity. All of your past payments are no longer considered, since you’re starting over; but, you may save your home.

Real Estate Agents:

They approach you wanting to sell your home for you. They say they want to help you out, but may actually be helping you out of your home and onto the street, and helping themselves to a profit, thanks to you.  You should make sure the agent helps you to contact a lender that will verify, once the home is sold, you can acquire another loan based on your debt to income ratio after the home is sold.  You may have equity that backed by another loan, will enable you to get into a home that you can afford.

As a homeowner, you are entitled to certain rights that your lender may not have informed you of, which could help save your home. Bankruptcy is a last alternative and should be avoided if possible. There are many other options available that could quickly resolve your situation.

Ultimately, the only thing that will stop a foreclosure proceeding is repayment of the debt, everything else is delay of the proceedings.