Pre-Foreclosure
Borrower Outreach Requirements


 

California law requires that your mortgage servicer personally contact you by phone or in person 30 days before recording a Notice of Default (which is the official start to the foreclosure process) to assess your financial situation and explore options to avoid foreclosure.

What Happens When Your Servicer Contacts You

During the initial contact, the mortgage servicer must advise you that:

  • you have the right to request a subsequent meeting, and

  • if requested, the mortgage servicer will schedule the meeting (which can occur telephonically) to occur within 14 days.

The assessment of your financial situation and discussion of options may occur during the first contact or at the subsequent meeting. Either way, the servicer must also provide you with the toll-free telephone number to find a HUD-certified housing counseling agency.

What Happens if the Servicer Can’t Contact You

If the servicer cannot get in contact with you, it cannot record the Notice of Default until 30 days after it has done all of the following:

  • Sent a first-class letter that includes the toll-free telephone number made available by HUD to find a HUD-certified housing counseling agency.

  • Attempted to contact you by telephone at least three times at different hours and on different days at the primary telephone number on file. (This requirement is deemed satisfied if the servicer determines that the primary telephone number, secondary telephone number, or any other numbers on file have been disconnected.)

  • Sent a certified letter two weeks after the telephone requirements are met that provides a way for you to contact it in a timely manner, including a toll-free telephone number that will provide access to a live representative during business hours.

  • Posted a prominent link on its website homepage with information about options to avoid foreclosure, financial documents borrowers should collect if they want to discuss such options, a toll-free telephone number to call to discuss alternatives to foreclosure, and the toll-free telephone number to find a HUD-certified housing counseling agency.

Additional Requirements for Certain Mortgage Servicers

Before recording the Notice of Default, certain servicers must also inform the borrower in writing:

  • that the borrower may be entitled to protections under the Service members Civil Relief Act, and

  • of the right to request copies of the note, deed of trust, assignments, and payment history.

Applicability

These outreach requirements are applicable to first lien mortgages or deeds of trust that are secured by owner-occupied residential real property that contains no more than four dwelling units.

Exclusions

The mortgage servicer does not have to contact you (or attempt to contact you) to assess your financial situation and explore options to avoid foreclosure if:

  • You have surrendered the property as evidenced by either a letter confirming the surrender or delivery of the keys to the lender, servicer, or its agent.

  • You have contracted with an organization, person, or entity whose primary business is advising people who have decided to leave their homes on how to extend the foreclosure process and avoid their contractual obligations to lenders, such as a “walk away” service. 

  • You have filed bankruptcy and the bankruptcy court has not entered an order closing or dismissing the bankruptcy case, or granting relief from a stay of foreclosure.

Residential foreclosures in California are typically nonjudicial if there is power of sale clause in your deed of trust. This means the foreclosure happens outside of the state court system.

Notice of Default

The nonjudicial foreclosure process formally begins when the trustee, a third-party, records a Notice of Default at the county recorder's office. The Notice of Default includes information such as the nature of the breach and how to cure it.

Within ten days of recording, the trustee mails a copy of the Notice of Default to the borrower and anyone requesting such notice. Within one month, the trustee mails a copy of the Notice of Default to any other interested parties, such as the borrower's successor in interest and junior mortgage holders, among others.

The notice of default gives the borrower three months to cure the default.

Notice of Sale

If you do not cure the default, a Notice of Sale will be recorded. (It can be recorded up to five days before the end of the three-month period.) The Notice of Sale will contain the time and place of the sale, along with other information such as the property address. The foreclosure sale date must be at least 20 days after the end of the three-month period.

The Notice of Sale will be:

  • posted at the property and in a public place in the city where the property is to be sold at least 20 days before the sale date

  • published once a week for three consecutive weeks with the first publication occurring at least 20 days before the sale date, and

  • mailed to the borrower, anyone who requested notice, and any successor in interest (among other parties) at least 20 days before the sale date.

The Foreclosure Sale

The borrower can reinstate at any time prior to five business days prior to the sale date in a nonjudicial foreclosure. 

The foreclosure sale must be held between the hours of 9 a.m. and 5 p.m. on any business day, Monday through Friday, where the property will be:

  • sold to high bidder, or

  • revert to the foreclosing lender and become Real Estate Owner

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