If you or someone you know is facing foreclosure in San Diego, it can be a stressful and scary situation. It is important to gather all of the information and facts surrounding foreclosure, so you are well informed on the unfortunate journey you are about to embark on. At Trusted House Buyers, we want you to feel fully equipped with the knowledge surrounding the terms, “judicial vs. non-judicial state.” Especially if you have not been in this situation before, all of the regulations, jargon, and information coming your way can seem too much to handle. Let us help you break it down!
What is Foreclosure?
Before we dive into the differences between judicial foreclosure and non-judicial foreclosure, it is important to first wrap our heads around what foreclosure is in the first place. The Judicial Branch of California tells us that, “Foreclosure is when a lender uses a legal process to force the sale of a property (like a home) to cover a debt. This can happen when someone takes out a mortgage to buy a home and then stops making payments (defaults on the mortgage).” There are many ways that a home can be foreclosed upon and a few examples include an HOA can foreclose a home when a homeowner has not paid dues or assessments. Or even a person or company can foreclose to collect money that has been owed. No matter your individual situation, foreclosure is never welcomed and can negatively impact your life, your credit, and of course, your finances.
Let’s dive into the details! If you have seen the term non-judicial foreclosure before, it is probably because it is the most common type of foreclosure in California. If you are foreclosing on your home in San Diego, this is most likely what you will be dealing with in the upcoming months. According to Keep You Keys, “Lenders may use the non-judicial foreclosure process when there is a “power-of-sale” clause in the mortgage note or deed of trust, which gives the lender the right to sell the house and use the profits to pay off the balance of the mortgage in the event that the borrower defaults on the loan.” As the name implies, the lender does not need to hold court in this case to carry out the foreclosure process. Think again if you think this is the easy way out. Actually, there are very strict laws surrounding a non-judicial foreclosure, and lenders are required to show documentation of the ownership of the mortgage and more importantly, the borrower’s failure to pay.
Now there is a process to non-judicial foreclosure, and the first order of business, is that the lender starts the process by sending the borrower a notice of default. This means that they are giving the borrower 90 days to cure the default, or get out of the weeds. According to Better.com, “A notice of default is a public notice that a borrower is behind on their mortgage payments. (Also known as being in default on their loan.) It’s typically filed with a court and regarded as the first step in the foreclosure process. If the borrower comes to a payment agreement with the lender or pays the outstanding balance within 14 days, the lender will stop foreclosure proceedings. However, if the borrower does not take these steps, the default is registered with the credit reporting agencies and the lender will continue proceedings to repossess the home.” If you have made it to this step, then your home is sold at auction.
Many lenders prefer a non-judicial foreclosure because it is usually less expensive than judicial foreclosure and faster. The time frame is simply expedited. Now for a homeowner, this fast timeline can be quite a negative. The process often moves quite efficiently, and can conclude within months or sooner. This requires the homeowner to quickly figure out what the next best plan of action is for their lives.
If your head is already spinning, well, get ready for more legal jargon. Now, when wrapping your head around judicial foreclosure, the first thing to note, is that it is actually very rare in California. Justia.com lays it out for us, “The lender will bring a lawsuit in court, and a judge will review the evidence submitted by both sides. They may hold a hearing to decide whether the homeowner is in default on the loan. The homeowner can try to reach a settlement with the lender before the hearing to prevent the foreclosure. If the parties cannot reach a settlement, and the court finds in favor of the lender, the court will enter a judgment of foreclosure. This will trigger a foreclosure sale and may expose the homeowner to a deficiency judgment for any remaining balance of the loan not covered by the sale.”
Now, one upside of a judicial foreclosure is that it takes time, sometimes up to a year or even longer! This lengthy timeframe can allow the homeowner to get their ducks in a row financially and make plans. There are rare cases that a lender would want to go down the judicial foreclosure rabbit hole even though it is a MUCH longer process. They may need that time to deal with complex issues such as a dispute over title.
My Head is Spinning, Now What?
We understand that facing foreclosure can be quite scary. The simplest and easiest solution, is to consider a cash buyer investor, like Trusted House Buyers to help pull you out of this situation. At Trusted House Buyers, we are able to provide you with a cash offer for your house today, we take homes in “as-is” condition, and have the ability to close within 10 days. This means that the roller coaster you have been on with the looming foreclosure process can simply end here. We want you to feel comfortable with the cash buying process and are here to hold your hand every step of the way. We are able to buy your home and put cash in you pocket so you can move on with your life without the scars of a foreclosure. We are simply a phone call away and are eager to answer your questions to help you enter the next chapter. Give us a call today at 619-786-0973. This one call has the ability to significantly change your life!