Foreclosure Law in California
In Los Banos, California, foreclosure is a legal process through which an entity which has issued a mortgage takes possession and/or ownership of the property that secured the mortgage, because the individual who took out the mortgage has consistently failed to make payments on it. The property in question is usually a house.
When consumers have to deal with foreclosure, it almost always involves a home. The bank will typically take possession of the house, and then sell it at auction, to try to encompass the balance of the mortgage. Banks usually want sell the property quickly, for as much money as possible.
In California, and every other state, foreclosed homeowners can go through a "foreclosure by judicial sale." In this form of foreclosure sale, a court supervises the sale, ensuring that the bank makes every reasonable effort to get the highest price possible for the house. The purpose of this is to maximize the chances that the bank gets, at the very least, the remaining balance of the mortgage. Although this may seem counter-intuitive, it is intended to safeguard the borrower: it helps prevent them from still owing money after the house is sold at auction.
In some states, original mortgages are regarded "non-recourse" loans. This means that once the house or other property that secured the mortgage is sold, and if it sells for less than the balance of the mortgage, the lender has to absorb the loss, and cannot sue the borrower for the remainder. This usually does not apply to second mortgages or refinanced loans.
How to Possibly Avoid Foreclosure in Los Banos, California
It is absolutely essential that you maintain a line of communication with your lender. Your can't expect your lender to accommodate your altered financial situation if they don't know about it. Ignoring the issue and hoping it will go away is the worst possible solution.
Throughout all this, you should remember one thing: the bank doesn't really want your house. After all, banks aren't real estate speculators, they're mainly money lenders. They stand to make a great deal of money if you are able to make your mortgage payments until it's paid off. They're likely to make much less if they're forced to sell your house.
If your financial situation suddenly changes, your lender may be willing to change the terms of your loan, at least temporarily, permitting for lower monthly payments. If this means that they will be able to get some money from you, with default as the alternative, it can become an attractive option for everyone involved.
As a last resort, you might consider a "short sale," which results in loss of the home, but it usually leads to a great deal of the debt on the mortgage being forgiven. Essentially, a short sale in California involves selling the house for whatever price it can fetch. The proceeds from the sale go to the lender, and if it sells for less than what's left on the mortgage, the balance of the debt is forgiven.
Can a Los Banos, California real estate attorney help?
If you live in Los Banos, California and believe that your house is in danger of being foreclosed, you may have more options and protections than you think. You may not know what all of them are, but an experienced real estate lawyer probably will.