by Doreen Martel

Created on: November 15, 2011   Last Updated: November 17, 2011

When people are facing foreclosure it is typically due to circumstances that are beyond their control.  Currently, homeowners in California are facing foreclosure at staggering rates. Currently, California foreclosures are ranked as among one of the highest in the nation. As many as one home in every 243 homes is facing foreclosure. Therefore, what homeowners should know about California foreclosure laws is there are features that can help protect them from additional actions such as deficiency judgments.

California is a “consumer-friendly” state and as such, the foreclosure rules are written to help protect lenders and consumers alike. For most consumers, this is helpful since those facing foreclosure are under typically a great deal of stress.  Here are some of the features of the California foreclosure laws that help protect consumers.

Types of foreclosure

Nearly all foreclosures in California are handled using the non-judicial procedure. For consumers this is beneficial as it prevents a lender from seeking a deficiency judgment after the foreclosure sale concludes. The primary reason for this is that California statutes provide that the foreclosure process be what is termed “one action” which does not allow the lender an opportunity to collect a deficiency judgment.

While not as common, California law does allow a judicial foreclosure procedure to be exercised by the lender. In this case, the lender could request that they be granted a deficiency judgment as part of the process. However, since non-judicial foreclosures generally take as few as four months to complete, the judicial process is seldom used.

Rights of redemption

California redemption rights are very confusing for most homeowners and as such may not be exercised very often. Redemption rights in most cases allow a homeowner to pay their entire mortgage plus any associated costs for a specific period of time after a foreclosure has taken place. In California, there are conditions for redemption rights which are as follows:

One year rights - homeowners may exercise their rights of redemption for up to one year after a foreclosure sale has occurred. The exception to this is if the lender has been able to secure a “full price bid” which means that the sale of the home covered the entire amount of the mortgage that was owed to the lender.

Three month rights - in the event that the lender accepted a full price bid, the homeowner still has three months to exercise their rights of redemption. In addition, the homeowner has up to 90 days after a notice of default has been filed against them to exercise these rights, even though these rights occur prior to the sale of the property.

California Civil Code, Section 2924 (PDF) governs all aspects of foreclosure in California.  There are numerous sections that contain information that homeowners should know about California foreclosure laws including information regarding “consultants” who have offered their services to help homeowners keep their home.  It is also important to understand that if a homeowner should file for bankruptcy relief that the foreclosure process could take longer than the typical time of four months.

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