Notice of Default - State of California
Upon receipt of the foreclosure referral package, the Notice of Default (“NOD”) is prepared and forwarded to the title company for recording along with the executed Declaration from the lender. Recoding of the NOD constitutes ‘first legal’ when recorded. Once recorded, a copy of the NOD and Declaration will be mailed to all parties to the Deed of Trust and parties having recorded a request for notice.
A Trustee Sale Guarantee (“TSG”) will be ordered from the title company and reviewed upon receipt that will disclose all parties entitled to notice, as well as any other encumbrances recorded against the Deed of Trust and reviewed for any possible defects which may exist that would prevent continuation of foreclosure. The one-month mailing notices are sent to any parties requiring notice.
Notice of Sale
A Notice of Sale (NOTS) will be recorded in the appropriate county and all parties requiring notice will be sent certified and regular mailings of the upcoming foreclosure sale date. The NOTS will be published for three successive weeks in a newspaper of general circulation for the city and county the property is located. A copy of the NOTS will be posted on the property itself and recorded in the county recorder’s office. The sale will be conducted at the time and place set forth on the NOTS.
Bidding instructions will be requested from the client and should be submitted to our office no later than 5 days before the scheduled sale date. Aztec will bid according to the client’s instructions. If there are no competitive bidders, the interest of the property will revert to the beneficiary. Third party bidders must outbid the beneficiary to obtain the property, and the sale proceeds are distributed in the order of priority, with the beneficiary being satisfied first.
The sale may be postponed pursuant to the client’s instructions without an additional publication. The sale may be postponed up to a maximum of 365 days after the original sale date. After that a new publication will have to be set with a new sale date, mailings, etc.
Redemption
There is a 3 month redemption period that must run from when the NOD is recorded before a foreclosure sale can be set. Effective June, 2009, CA implemented the CA Foreclosure Prevention Act which required an additional 90 days of redemption:
On February 20, 2009, Governor Schwarzenegger signed ABX2 7 and SBX2 7, which establish the California Foreclosure Prevention Act. The California Foreclosure Prevention Act modifies the foreclosure process to provide additional time for borrowers to work out loan modifications while providing an exemption for mortgage loan servicers that have implemented a comprehensive loan modification program. Civil Code Section 2923.52 requires an additional 90 day period beyond the period already provided before a Notice of Sale can be given in order to allow all parties to pursue a loan modification to prevent foreclosure of loans meeting certain criteria identified in that section.
A mortgage loan servicer who has implemented a comprehensive loan modification program may file an application for exemption from the provisions of Civil Code Section 2923.52. Approval of this application provides the mortgage loan servicer an exemption from the additional 90-day period before filing the Notice of Sale when foreclosing on real property as designated by this Section.
Upon expiration of redemption, sale, publication and posting dates will be set. The sale cannot be held until the expiration of 21 days from redemption.
Sale
The sale will be conducted at the time and place set forth on the NOTS. Aztec will bid according to the client’s instructions. If there are no competitive bidders, the interest of the property will revert to the beneficiary. Third party bidders must outbid the beneficiary to obtain the property, and the sale proceeds are distributed in the order of priority, with the beneficiary being satisfied first.
The sale may be postponed pursuant to the client’s instructions without an additional publication. The sale may be postponed up to three times at the request of the beneficiary, after which it will be necessary to republish a new sale date.
Conveyance & Final Title
After the foreclosure sale is conducted, a Trustee’s Deed Upon Sale is issued by Aztec conveying title to the successful bidder. If the property reverts to the beneficiary, it is sent for recording within a few days of the sale. If a third-party purchases the property, the unrecorded Trustee’s Deed will be sent to the address specified by that party.
If the property is to be conveyed to the Secretary of Housing & Urban Development (“HUD”) or Secretary of Veterans Affairs (“VA”), a Grant Deed from the beneficiary to the agency is sent to the client for execution prior to the sale.
After receipt of the Grant Deed, if it is a VA loan, the deed is sent for recording immediately. Aztec will order a title policy and forward it to VA within their required time line. If it is a HUD loan, Aztec will await instructions to record the deed to HUD. Prior to the deed recording, Aztec will obtain tax and lien information to verify if title is clear before recording the HUD deed. When all taxes and liens are cleared, with the client’s instructions, the deed is recorded. Once recorded, the title policy is obtained and forwarded to HUD within their required time line. The clients are given copies of the title polices and recorded deeds.
The only post-sale right of redemption occurs when an IRS tax lien is recorded against the property. Once the sale is held, the lien is extinguished, but the IRS retains a 120-day right of redemption. During this time frame, the IRS has the right to purchase the property.
Reinstatement and Payoff
The trustors, owners and junior lienholders have a statutory right to reinstate the loan up to five business days prior to the sale. The beneficiary may waive the five-day limit and accept reinstatement at any time prior to the sale. Reinstatement must be tendered in the amount of all sums due the lender plus all foreclosure fees, costs and any attorney’s fees and costs incurred.