California mortgages foreclosure - Private Trustee Sale or Judicial Proceeding?

Foreclosure in California - the Lender's options

In California the mortgage foreclosure process can take place in one of two ways. Most of the time, the lender will foreclose at a private trustee's sale, which is authorized under the deed of trust.  However, in a very small percentage of cases, the lender will bring a lawsuit for a judicial foreclosure.

As a foreclosure process, a private trustee sale is much faster than a judicial foreclosure, taking as little as four months to complete.  However, a judicial foreclosure takes as long as any other lawsuit on the regular civil calendar, usually one year or longer. 

A civil litigation (judicial foreclosure process) has higher costs, including attorney's fees, procedural complications, and the possibility of defending against a desperate or aggrieved borrower.  As a result, a private sale is more often pursued by the lender as the foreclosure option because it is typically quicker and less expensive to conduct.  However, in high valued properties, judicial foreclosure may be more appropriate because it may allow the lender to pursue collection of the remaining deficiency debt after judicial foreclosure.

Foreclosure in California - right of redemption

Judicial foreclosures are also different because they provide the borrower with the right of redemption after the foreclosure sale is completed:

• In California, the period of redemption is either 3 months or 12 months after foreclosure. 
• If the sale raises enough money to repay the secured debt, the redemption period is 3 months after foreclosure. 
• If it doesn't, the period is 12 months after foreclosure.

In order to redeem the house, the you must pay the "redemption price." This is generally the price paid by the purchaser at auction plus any taxes or assessments that are due, along with costs and interest.

This right of redemption does not exist in California for non-judicial or private foreclosure sales.