Foreclosure Law in California
In Newport Beach, 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 person 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 cover 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 type 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 protect the borrower: it helps prevent them from still owing money after the house is sold at auction.
In some states, original mortgages are considered "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 Newport Beach, California
To avoid foreclosure, communicating with your lender is key. Let's face it - if you're in a situation where foreclosure looks like a possibility, your life is not going to be easy for some time. While it's difficult to step up and acknowledge unpleasant facts, doing so will make your life much easier in the long run. If your lender is aware of your situation, it's far more likely that you'll be able to work something out with them.
Bear in mind that banks aren't in the business of real estate speculation - they're in the business of lending money, and making profits through interest on their loans. In short, the bank doesn't really want your house - they'd much rather have you continue making your mortgage payments. For banks, foreclosing on a home is a last resort. Basically, nobody likes foreclosures, and everyone wants to avoid them.
If your financial situation suddenly changes, your lender may be willing to change the terms of your loan, at least temporarily, allowing 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.
In California, some buyers have no choice but to resort to a short sale. This is simply the sale of the house, and using the funds to pay off the remainder of the mortgage. One advantage of a short sale is that, if the house sells for less than the mortgage balance, the remaining debt is discharged, and the borrower is free and clear.
Can a Newport Beach, California real estate attorney help?
If you live in Newport Beach, 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.