Understanding Foreclosure Saratoga CA

One thing should be kept in mind: as a general rule, a lender would rather receive payments than receive a home due to a foreclosure. Lenders are not in the business of selling homes and will often try to accommodate homeowners who are having payment problems. The best plan is to contact the lender before payment problems arise. If monthly payments are too hefty, it may be that a lender will be able to make some alternative payment arrangements until the owner's financial situation improves.

If a homeowner has not made any alternate arrangements with the lender, the lender may decide to begin the foreclosure process. Under some circumstances, the lender, whether a bank, savings and loan, or private party, will request that a trustee, often a title company, file a notice of default with the county recorder's office. A copy of the notice is mailed to the homeowner. Once the notice of default has been recorded, the homeowner has 3 months to bring the loan current. If during the 3 month period the owner cures the default by making up the payments, the deed of trust or mortgage will be reinstated and regular monthly payments will continue.

If the default is due to a balloon payment not being made when due, the lender can require full payment on the entire outstanding loan as the only way to cure the default. If the default is not cured, the lender may then direct the trustee to sell the property at a public sale.

In cases of a public sale, a notice of sale must be published in a local newspaper and posted in a public place, usually the courthouse, for three consecutive weeks. During this time, it may still be possible for the homeowner to work out a postponement on the sale with the lender.

However, if no postponement is reached, the property goes "on the block." At the sale, buyers must pay the amount of their bid in cash, cashier's check, or other instrument acceptable to the trustee. A lender may "credit bid" up to the amount of the obligation being foreclosed upon.

With the recent attention given to foreclosure, there also has been corresponding interest in buying foreclosed properties. However, the buyer should beware, foreclosed properties are likely to be burdened with overdue taxes, liens, and clouded title. A buyer should do his homework and ask a local title company for information concerning these outstanding liens and encumbrances. Title insurance may or may not be available following a foreclosure sale or various exceptions may be included in any title insurance policy issued to a buyer of a foreclosed property.