Understanding Foreclosures

What is an REO  ?

REO  stands for Real Estate Owned. An REO is a property that is owned by a financial institution, and it becomes an REO after a foreclosure auction. 
If there is no outside buyer for the property at the Trustee Sale or Auction, then the property goes back to the Financial Institution or Bank.   An REO asset is a bank owned asset or a foreclosed property,  and this will be sold to the public, after the Bank does its inspections, due diligence, valuation, and also vacates the property.  All REOs are listed vacant and sold by real estate brokers or agents.  Some REOs are also sold through Auction Companies,  such as REDC or Hudson and Marshall. 

One of the ways to find Foreclosures is to check out our website    www.foreclosurehotbuys.com

Information on the California Foreclosure Process

Foreclosures in California are primarily administered out of court, called “ Non Judicial Foreclosures” , although court foreclosures are allowed. Non Judicial foreclosures can take about four months.

Pre-Foreclosure/ Notice of Default/ Reinstatement Period

The process begins when a lender files a Notice of Default (NOD) with the county recorder stating the default amount and the date the borrower must pay off the default. The notice gives constructive notice to the public and a notice is mailed to the borrower and all affected parties.

After the recording of the Notice of Default, in the state of California, the borrowers and the junior lein holders are given proper notice and the borrowers have 90 days to pay or bring their account to a current status. This period is called the Reinstatement Period.

Many loans in default are reinstated or cured or paid current during this 3 month default period. The amount needed to reinstate will consist of the delinquent payments, advances and fees and costs associated with the filing of the Notice of Default and other necessary documents. When the default is cured, a Notice of Recession will be prepared by the Trustee so it can be signed by the Beneficiary (Lender). When the Notice of Recission is recorded, then it cancels the Notice of Default.

Notice of Trustee Sale , also called the Auction

  If after 90 days the borrowers have not yet paid the default and brought their loan current, the Lender may authorize the Trustee to file a Notice of Trustee Sale (NOS). The Trustee Sale is what we call the foreclosure sale and is also called an Auction. 21 days after the NOS is filed, a foreclosure sale is held at the place of public auction, typically at the steps of the County Court House. The Lender or Beneficiary may not hold the auction or may postpone the auction for a variety of reasons, i.e. bankruptcy filed by borrowers, property is in escrow and set to close soon, property is listed for sale with offers being presented, or the Lender does not want to foreclose yet.
At least 20 days before the trustee's sale, the notice of sale must be posted on the property and in one local public location. The notice is also published once a week for three weeks in a local newspaper, starting at least 20 days before the sale date. The notice is mailed to the borrower at least 20 days before the sale and to anyone who requests the notice. The notice must contain the date, time, and location of the sale, the property address, and the trustee's contact information. In addition, the notice of sale must be recorded with the county recorder at least 14 days before the sale.

Up to five business days before the trustee's sale, the borrower may pay off the default plus any applicable costs of foreclosure and stop the foreclosure process.

The trustee's sale is a public auction and the property is sold to the highest bidder. The trustee usually requires bidders to pay the full bid amount in cash or cashier's check. Anyone may bid at the sale, including the lender and any junior lien holders. A trustee's sale may be postponed by announcement at the sale. If a sale is postponed more than three times, a new notice of sale must be issued.

After the sale is complete, the trustee transfers ownership to the winning bidder. The borrower does not have the right to redeem the property after the sale.

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