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Friday
Apr302010

California Mortgage Foreclosure Laws – Postponement of Trustees Sale

The postponement of the Trustees Sale is not an official foreclosure step under California foreclosure process, but perhaps it should be because most auctions are postponed several times before taking place.

The California mortgage foreclosure laws (Civil Code section 2924g) allow the lender’s trustee to postpone the foreclosure auction for up to one year without having to restart the California non-judicial foreclosure process.

Reasons for Postponement

Under The California mortgage foreclosure laws, there could be several reasons for the postponement:

1.  Lender/Borrower Agreement - This is the most common postponement reason under the California Mortgage foreclosure laws. For example, a loan modification or forbearance agreement negotiation will often result in a postponement.  Homeowners should also be aware that in the case of forbearance agreements, missed payments could automatically restart the foreclosure process without any further notifications being made by the lender.

2. Bankruptcy Filing - If a homeowner files for bankruptcy protection, California mortgage foreclosure laws require that the courts put an automatic stay on all debt collection actions -- this includes foreclosure. While this may seem like a good solution, bankruptcy merely delays the foreclosure. In most cases, the lender will file a request to the court for an order for relief from the stay. The bottom line is that the property is collateral for the debt, and the lender has the right to take the collateral if the homeowner lacks the ability to pay the debt as agreed.

3. Lender’s Beneficiary's Request – California mortgage foreclosure laws allow the lender’s beneficiary to request (decide) to postpone the sale. They might do this for any reason.  For example, they might not be prepared to take the property or believe the property is about to be sold in a private sale.

4. Trustee's Discretion - The lender’s trustee may postpone the sale under the California Mortgage foreclosure laws. One common reason is that they are unable to reach the lender for instructions.

5. Court Order - Although somewhat rare, a court order may be used to postpone the sale, this is especially true when a lawsuit is filed with regards to some allegation affecting the title or the loan.

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