California Foreclosure Guide

Foreclosure is the legal process by which a lender attempts to recover the balance of a loan from a borrower who has defaulted on their mortgage payments. In California, foreclosure is typically non-judicial, meaning it takes place outside the court system, though judicial foreclosures are also an option in some cases.

The impact of foreclosure goes beyond losing a home—it affects your credit, financial stability, and emotional well-being. Understanding these impacts can help you make informed decisions.

A foreclosure can lower your credit score by 200–300 points, making it difficult to secure loans, credit cards, or rental housing in the future.

Beyond the immediate loss of your home, foreclosure may also result in legal fees, deficiency judgments, and tax implications if forgiven debt is considered taxable income.

The stress of foreclosure can take a significant emotional toll on homeowners and their families, especially if the home holds sentimental value.

• Default: When a borrower fails to meet the terms of their mortgage agreement, such as missing payments.
• Notice of Default (NOD): A formal notice filed by the lender to indicate the borrower is in default.
• Notice of Trustee Sale (NOTS): A public notice that the property will be sold at auction.
• Reinstatement: The process of bringing the loan current by paying the overdue amount, including fees.
• Deficiency Judgment: A court order requiring the borrower to pay the remaining loan balance if the foreclosure sale doesn’t cover the full debt.

California’s foreclosure process follows a structured timeline, giving homeowners multiple opportunities to take action before losing their property.

• Reinstatement Period: Borrowers have 90 days after the NOD filing to reinstate their loan.
• Redemption Period: In judicial foreclosures, borrowers may redeem their property by repaying the loan in full within a certain timeframe.

The Johnson family in Los Angeles fell behind on mortgage payments due to medical expenses. After receiving a Notice of Default, they contacted San Diego House Heroes for assistance. By selling their home before the auction, they avoided foreclosure, protected their credit, and walked away with financial stability.

Legal Protections for Homeowners
California has robust laws designed to protect homeowners during the foreclosure process.

Right to Reinstate
Homeowners can cure their default and reinstate their loan up until five business days before the auction.

Anti-Deficiency Protections
California law prohibits deficiency judgments in non-judicial foreclosures for primary residences.

Notice Requirements
Lenders must provide clear, written notices at every stage of the foreclosure process.

Foreclosure can attract fraudulent “rescue” schemes. Protect yourself by:

• Verifying the legitimacy of foreclosure assistance companies.
• Avoiding upfront fees for foreclosure prevention services.
• Consulting with licensed professionals before signing agreements.

Negotiate with your lender to adjust the terms of your loan, potentially lowering your monthly payments or extending the loan term.

Request a temporary pause or reduction in payments, allowing you time to recover financially.

Sell your home for less than the mortgage balance with lender approval, avoiding the long-term damage of foreclosure.

Filing for bankruptcy can temporarily halt foreclosure proceedings, giving you time to reorganize your finances.

Discuss how home equity can provide immediate funds, allowing seniors to access high-quality care without financial stress.

Selling your home before foreclosure can help you:

• Protect your credit score.
• Retain equity in your property.
• Avoid the emotional and legal challenges of foreclosure.

We specialize in purchasing homes quickly and as-is, even during the foreclosure process. Here’s how we make it easy:

• Cash Offers: We provide fair cash offers for your home, regardless of its condition.
• Fast Closures: Close in as little as seven days, giving you the flexibility you need.
• No Repairs or Cleaning: We buy homes in any condition, saving you time and money.

The Thompson family was struggling to keep up with mortgage payments on their San Diego home. Facing foreclosure, they contacted San Diego House Heroes. Our team bought their home quickly, helped them relocate, and provided the financial relief they needed.

Foreclosure is more than a financial challenge—it’s an emotional one. The process can leave homeowners feeling stressed, anxious, and even embarrassed. Understanding the emotional toll of foreclosure and learning how to cope can help you navigate this difficult time with resilience.

Stress and Anxiety
Facing foreclosure can feel like a ticking clock. Worries about losing your home, impacting your family, and managing finances can be overwhelming.

Shame and Embarrassment
Many homeowners feel a sense of personal failure when facing foreclosure. It’s important to remember that financial hardships are often caused by circumstances beyond your control.

Grief and Loss
For many, a home represents stability, memories, and identity. Losing it can feel like losing a part of yourself.

Anger and Frustration
The foreclosure process can be confusing and intimidating. Miscommunication with lenders or feeling powerless in the system often leads to frustration.

Focus on What You Can Control

• Educate yourself about your rights and options.
• Take proactive steps to address the situation, such as reaching out to your lender or consulting with professionals.

Seek Support

• Talk to friends, family, or a counselor about your feelings.
• Join support groups for individuals facing foreclosure.

Take Action

• Consider selling your home to avoid foreclosure and regain control.
• Work with experts, like San Diego House Heroes, to navigate the process with less stress.

Maria, a retired teacher in San Diego, faced foreclosure after unexpected medical expenses drained her savings. Feeling overwhelmed and ashamed, she reached out to San Diego House Heroes. Our team helped her sell her home quickly, avoid foreclosure, and move into a smaller,more affordable space. “They didn’t just buy my house—they gave me peace of mind,” Maria shared.

Judicial Foreclosure

• Involves court oversight.
• The lender files a lawsuit to reclaim the property.
• Provides a redemption period for homeowners to repay the loan in full after the auction.

Non-Judicial Foreclosure

• The most common method in California.
• Faster and less expensive than judicial foreclosure.
• Follows a strict timeline governed by state law.

The Homeowner Bill of Rights (HBOR)

• Prohibits “dual tracking,” where lenders pursue foreclosure while negotiating loan modifications.
• Requires lenders to provide a single point of contact for borrowers.
• Mandates proper notification of foreclosure proceedings.

The Right to Reinstate

• Borrowers can reinstate their loan by paying the overdue amount up until five business days before the auction.

Anti-Deficiency Laws

• Protect homeowners from owing additional money if the foreclosure sale doesn’t cover the loan balance, provided the property is a primary residence and was purchased with a standard mortgage.

HUD-Approved Housing Counselors
Work with a certified housing counselor to explore your options and create an action plan.

Legal Aid Organizations
Seek free or low-cost legal advice to understand your rights and navigate foreclosure proceedings.

Real Estate Experts
Work with companies like San Diego House Heroes, who specialize in helping homeowners sell properties under challenging circumstances

When the Patels received a Notice of Trustee Sale for their Sacramento home, they felt overwhelmed by the legal jargon and fast-moving deadlines. By partnering with a legal aid organization and San Diego House Heroes, they negotiated a loan modification and avoided foreclosure, giving them a second chance to stay in their home.