How are California mortgages foreclosed?
The primary method of foreclosure in California involves what is known asnon-judicial foreclosure. This type of foreclosure does not involve court action. When thedeed of trust is initially signed, it will usually contain a provision called apower of sale clause, which upon default allows atrustee to sell the property in order to satisfy the underlying defaulted loan. Thetrustee acts as a representative of the lender to effectuate the sale, which typically occurs in the form of an auction. Unlike many states where trustees are appointed by lenders, title companies primarily serve as trustees managing foreclosure sales in California. California has a requirement known as theone-action rule. If a foreclosure is completed by non-judicial means, a second action to recover a deficiency judgment is not permitted. Using a judicial foreclosure, a lender may recover a deficiency judgment in certain circumstances. But since this process takes longer thannon-judicial foreclosure, it is rarely used. California non-judicial remedies have stringent notice requirements and the mortgage documents are required to contain thepower of sale language in order to use this type of foreclosure method.Judicial foreclosure are permitted in California and these usually occur when nopower of sale language is included in the loan documents.