A lot of clients come in worrying about their house being in danger of immediate foreclosure. By filing for bankruptcy at any time during the foreclosure process, you automatically pause this procedure and protect your home for a limited time. Here is a basic breakdown of the timeline of a typical foreclosure:
California law says that a lender can begin the foreclosure process once the borrower has missed one payment. However, a lender typically waits until the borrower is about 90 days (or three payments) delinquent before beginning the actual foreclosure process. This process is known as the "pre-foreclosure period."
The homeowner will then receive notice letting them know that the lender has filed a Notice of Default (NOD) against the property. This is the first "official" step to the foreclosure process. Once the NOD is issued, the lender may not take any further action on the foreclosure for 90 days.
During this 90 day "window" after the NOD has been filed, if the borrower wants to make his loan current, he must catch up arrears, plus interest and legal fees incurred by the lender.
After the 90 day "waiting" period is over, a Notice of Trustee Sale is issued to notify that the foreclosed property is for sale and a date of sale is announced. This notice is published in the newspaper, mailed to the owner, and posted on the front door of the property. This sale date is generally 21 days after the 90 day foreclosure period has ended. Note that if a Notice of Trustee Sale is delayed, the borrower doesn't receive a notice of the new date unless a full year has passed since the Trustee's Sale was first set.
At the Trustee Sale, the property is sold to the highest bidder. The opening bid must usually include the complete foreclosing mortgage balance including legal fees and Trustee sale expenses. These days there usually are no bids, and the property automatically reverts back to the lender.
Once a new owner owns the property, they may begin eviction proceedings against the occupant. If the occupant was renting the property, he may have additional time between the sale of the home and eviction.