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所读专业 - Finance

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    Foreclosure/Trustee's Sale

    rgmao 2011-06-21 10:06
    All discussion, answers provided at this page and at this website are only for information purpose, and they are our own opinions base on our own knowledge, understanding and experience to the related issue(s). For your own interest and protection, you shall consult and confirm with your attorney for legal and accurate answer(s).




    A: Foreclosure proceedings are initiated by recording a Notice of Default (NOD) in the county in which the property is located. This recording of the 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. Many foreclosure proceedings are reinstated during this 3-month default period. The borrower or anyone with a subsequent interest in the property may pay the beneficiary or his authorized agent the amount necessary to cure the default. This amount will include delinquent payments, and advances and the fees and costs associated with filing the notice of default and other necessary documents. When the default is cured, a Notice of Rescission will be prepared so that it can be signed by the beneficiary. When the Notice of Rescission is recorded it cancels the Notice of Default.


    If after 90 days the borrower has not remitted the arrearages, the lender may 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.

    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.


    A: Purchasing a foreclosure property from a trustee's sale is high-risk, high-reward. Trustee's sale property is always sold "as-is", for cash or cash-equivalent. When you buy from a trustee's sale, you must use extreme caution. You will not be provided any information, disclosures, related material, and an opportunity to view the inside and outside of the property before the sale. It is your own responsibility to find your own ways, own resources to check, investigate and study the property including but not limit to its physical condition, value, tax, liens and so on. You must do all of the home works before you go to the auction.
    At the auction, the auctioneer will ask qualify anyone intends to bid when the individual property is announced. To qualify for biding a property, you will need to show the auctioneer cash or cashier’s checks sufficient to cover any bids you will be making. Usually you can get cashier’s check made payable to you, then if you are a successful bidder, you endorse them payable to the Trustee. Common practice is to have large checks to cover most of the expected bid, with smaller checks to cover increases in the bidding. Keep in mind that anyone around you is a prospective bidder, keep your information private.
    At the bidding, the auctioneer will ask if anyone would like to bid when he/she announces a property's opening bid. If it is a property you are interested in, your minimum bid should be a penny over the opening bid. The property will not sell until the third call. If other bidders are interested in the same property, bids will go up usually in nay dollar increments. Know the maximum bid you are willing to place and do not exceed that number. It’s very easy to get involved in a contest of who’s going to win the bid, if you are an investor, you need to make a profit, you shall have a clear mind and do not prove you can bid higher.
    If you are the successful bidder, you will need to sign checks over to the Trustee. Usually, after all sales are complete, the auctioneer will write you a receipt, ask how title is to be held and you’ll be done. The Trustee can record the Trustee’s Deed for you or they will send you the deed along with any excess funds from your checks. Sales are sometimes invalidated by legal reasons, if so, you will receive your funds back. Expect to have everything done one to two weeks after the sale.
    Foreclosure sales are commonly postponed for many reasons, you will need to track properties you are interested in, making sure to record postponement dates and reasons for postponement. When a property has postponed many times, other investors will sometimes lose track of properties you are interested in, thus reducing competition at the actual sale.
    When you are seeking information regarding a property, the TS# is usually used to reference the property. Trustee service are the ones usually processing a foreclosure, typically the only information they will give out regarding a property will be the date, time and location of a sale.
    Opening bids will not be available up to the actual time of sale in many cases. Be aware that published bid amounts will differ from the actual bid amount at the sale. Sometimes they will be slightly higher to cover actual costs and sometimes the lender will reduce a bid making a property an attractive purchase.


    A: A deficiency is the difference between the fair market value of the property and the amount received, providing the amount received is less than the amount owed.

    California law affords homeowners protections when they first buy a house. One of the protection is that homeowners can not be held accountable for a deficiency in case you default on the mortgage, but only for the original purchase-money security. If homeowners refinance, they do not creat another purchase-money security interest. When homeowners refinance, they aotumatically waive such protection -- usually without knowing it.

    In the case of second mortgages or HELOCs (home equity lines of credit), California law does not protect the borrower from deficiency actions. There is still some question as to whether homeowners create a purchase-money security interest when you buy a home, create a first and second mortgage simultaneously and then default on both mortgages.


    A: In California, if your mortgage is a purchase-money security, yes, foreclosure sale will release you from deficiency. However, for your own interest and protection, you shall consult and confirm with your attorney for legal and accurate answer(s) before you make any decision.

    A: If your mortgage is not a purchase-money security, or if you have second mortgages or HELOCs, California law does not protect the you from deficiency actions, short sale might make you have a chance to settle your debt(s) with lender(s). However, for your own interest and protection, you shall consult and confirm with your attorney for legal and accurate answer(s) before you make any decision.
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