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California, like most states, has a “non-judicial” foreclosure system in which a lender and trustee send the borrower a series of notices and eventually, seizes the property without any court order. Once the foreclosure sale takes place, it terminates most legal rights the homeowner has in the property, and the property is transferred either to the lender or a third-party purchaser. The foreclosure begins once the borrower is informed of the default status on their mortgage by the lender. The borrower needs to act quickly in order to stop the foreclosure process from continuing. Usually, the borrower asks the lender to modify their mortgage payments in order to pay back the past due amount. If this is not an option, or if the borrower can not afford to pay the new mortgage payments, the foreclosure process will continue unless the borrower takes legal action, such as a lawsuit against the lender, the trustees, or by receiving federal protection from a bankruptcy. 

  1. Suing the Lender: Once you and your mortgage lender have signed off on a mortgage agreement, both parties are legally obligated to uphold their end of the agreement or take appropriate steps to amend the agreement. The borrower is entitled to take legal action against the lender if the lender fails to comply with any part of the agreement. The lender must also comply with any federal and state real estate laws.

  2. Suing the Trustee: In a nonjudicial foreclosure, the party who typically handles the foreclosure process is a third party called a trustee. The trustee is supposed to be a neutral party that administers a nonjudicial foreclosure. They are supposed to follow state and federal laws, but because the lender usually chooses the trustee, the trustee has a financial interest in the lender.

  3. Bankruptcies: A Bankruptcy provides the petitioner with an automatic stay against collections. The automatic stay provides debtors with protection against all collection efforts during the bankruptcy case, this includes foreclosures. The lender also has the right to ask the bankruptcy court to lift the automatic stay and allow them to continue with the foreclosure sale.

Even if the property was sold at a foreclosure auction, the borrower still has the right to sue the lender or the trustee in order to get the foreclosure overturned.  Our staff at Property Defense has been able to stop foreclosures before the auction takes place and we have been able to overturn foreclosure after a foreclosure auction. Don't hesitate, contact us now to see how we can help you defend yourself against a foreclosure.

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