When a borrower (trustor) falls behind in mortgage payments, the lender (beneficary) will probably attempt to contact the borrower by phone and by mail before actually starting the foreclosure process. If the lender is unsuccessful in collecting the money due in these initial contacts, a "Notice of Default" (NOD)will be filed at the County Recorder's office. The "Notice of Default" starts the timeclock of the foreclosure process. A property is not "in foreclosure" until the "Notice of Default" is filed.
Once the "Notice of Default" is recorded by the County Recorder, it becomes public record, and the information is available to anyone searching the public record system. After the "Notice of Default" is recorded, the borrower can expect to receive several solictations from companies and individuals offering various methods of assistence, and charging various fees.
After the "Notice of Default" is filed, the borrower has three calendar months to bring payments current. Although the lender may continue to attempt to contact the borrower, no further legal action can be taken until the three month period has passed.
At the end of the three month period, if the past due payments are not brought current, a "Trustee's Sale" is scheduled, and a second notice, the "Notice of Trustee's Sale" is recorded. The "Trustee's Sale" cannot take place sooner than 21 days after the "Notice of Sale" is filed.
On the day of the sale, the property will be sold to the highest all cash bidder. The first bid, made by the foreclosing lender, is usually equal to the unpaid principal or remainder of the loan plus accrued interest. However, a foreclosing lender may also state an opening bid less than the total amount owed. This is sometimes done due to the lender's internal accounting requirements. If no higher bids are made, title to the property is then acquired by the foreclosing lender.