Pre-forclosure timing

9 Replies

? Huh? Do you mean the "Notice of Default"? Or do you mean the "Notice of Sale"? If NOD, a minimum of 111 days after the filing of the NOD to sale. (90 days, plus an additional 21 days after the filing of the NOS). If you mean the NOS, in as little as 21 days after publication. This is for California.

Typically, in California, the lender won't be able to go to sale until the 240th day of delinquency.

The date of sale and cure date are usually written in the notice.  240 days?  Whoa.  I try and hit mine with direct mail at the beginning and toward the end.  With 240 days, I'd probably send one in the middle as well.  

Dion - That's not entirely true. For a monetary default on a single family 1-4, yes. There are MANY exceptions to the 120 day rule. Also, do my math...I said 240 days. That's 120, plus 90, plus 30. Granted, I also said "Typically" so, I meant for that to leave room for the exceptions.

...and thanks for the link.

@Steve - Sale date is only written in the notice of sale, not notice of default for obvious reasons. I'm not aware of any "Cure" date in the notice of sale but suffice it to say, inside of 5 days from sale, borrower loses their legal right to cure. Also, if trying to review a loan mod or short sale or other alternative to foreclosure inside of 37 days from the sale date (I may be off by a day or two) you may be out of luck.

Moral of the story is a residential loan may not have a Notice of Default issued until the loan is past due 120 Days. (Period)  There are no, zero, zilch - exceptions to that rule.  

In the banking world a loan is considered non-accrual usually at the 90 days past due however that does not provide for an exception to the rule of Notice of Default.  Those two ideas are not the same.

Originally posted by @Marcus Squires :

Yes I meant notice of default, once the notice of default is filed the property is in preforclosure correct?

Thanks Dion DePaoli for the helpful link

 "Pre-foreclosure" is an awkward term.  Technically any loan not in foreclosure is indeed "pre" foreclosure.  I think what you mean by "pre" is something in line with being more than 120 days past due but no additional step in the legal process of foreclosure.  

In that idea, there is a grace period afforded to any borrower once a Notice of Default is sent which the borrower has a right to cure the default.  That time line will be state specific.  Then after that time has elapsed, the Mortgagee can proceed with further legal actions in line with the foreclosure process of the state.  Whether that be judicial or non-judicial.  Depending on the process and state a right to cure the default expires and a right to redeem the debt occurs.  The right to redeem is also state specific and expires pre and post foreclosure sale.  Once the right to cure the default expires it is the Mortgagee's option in line with state law as to whether they wish to accept the amounts due under the default or they require a full payment by way of redemption.  

Dion, you are incorrect. I suggest you read the rulings and their updates before opinning so strongly. I've foreclosed before 120, had it challenged and survived the challenge on multiple ocasions. And it's not because i'm any good at my job, just because the rules allow me to do so.

Death of all obligors - Can file NOD provided there are no legitimate successors prior to 120 days.

Loan made to a non natural entity - Can file the NOD without the 120 day rule

Ilegal transfer of ownership - Can exempt you from the 120 day rule.

Senior or subordinate lien holder is already in foreclosure, lien holder can join and file NOD prior to 120 even if their loan is current.

If you mean a private lender, the foreclosure can occur as soon as the legal time limit has passed. However, if you are talking about a bank foreclosing, a recent study showed that the average time from the filing of the Notice of Default to filing a Notice of Trustee Sale is just under a year. And, the average time from filing the NTS to actual auction is approx. 340 days. I've been following a few where the NOD is three plus years ago. Banks have been under a lot of pressure to slow foreclosures.