The promissory note is secured by what is known as a "Trust Deed” or "Deed of Trust." The deed of trust is a “lien” on your property once it is recorded with the county recorder. It is the way that you guarantee that the payments you agreed to make to the lender under the promissory note are actually made. The deed of trust allows the lender to force your property to be sold at an auction if you do not make your payments on a timely basis. Foreclosure is the process where the lender enforces the promissory note by using the powers granted under the deed of trust to sell your property at an auction (the "Foreclosure Sale" or "Trustee's Sale").

You may have heard from others who are two or three months late in their payments that their lenders have not yet started the foreclosure process against them. Most lenders do not immediately start the foreclosure process when someone is only one or two months late, but they do have a right to do so. Some lenders have specific time periods that must pass with no payments from the borrower before they will commence the foreclosure process. Once the process is started, however, you have little time to waste. Immediate action must be taken to avoid foreclosure if that is the best option for you.

The nonjudicial foreclosure process takes approximately 4 months. To be specific the minimum amount of time required for a foreclosure to take place is three months and 20 days. To start the nonjudicial foreclosure process the lender will record what is known as a "Notice of Default" with the county recorder in the county where the property is located. Then, not less than three months from the date of recording that notice of default, the lender must then record what is known as a "Notice of Trustee’s Sale." It is called a trustee’s sale because the trustee, acting on behalf of the lender or “Beneficiary” of the promissory note, will set an auction for the sale of your property. For the final foreclosure auction sale to occur the date for the auction cannot be less than 20 days after the publication of the Notice of Trustee’s Sale which occurs in a local newspaper. Because of weekends and holidays this process usually takes more than the minimum amount of three months and 20 days. That is why, generally speaking, we say the process takes about four months.

Up until the date of the trustee's sale you may sell your property to a third party. You may also "Cure" the default up until five days before the date set for the trustee’s sale by paying only the amount that is delinquent plus foreclosure costs (known as the "cure" amount). After that date the lender can require you to pay the total amount you owe on the loan, although in most cases lenders are happy to accept the cure amount up until the date of the trustee’s sale.

The trustee’s sale auction usually occurs on the steps of the courthouse in the county where the property is located. Anyone may bid on the property being foreclosed on, including the lender who can make a "Credit Bid" for the property. A credit bid is when the lender bids either all or part of the amount that you owe at the trustee's sale. Often that amount is so high that there are no third-party purchasers willing to bid more than that amount. This is why many lenders now own thousands of homes in California, which they refer to as "REO’s” or "Real Estate Owned." Lenders generally do not like owning property because it is expensive to maintain and protect and lenders are not in the business of owning property -- they are in the business of loaning money. That is why most lenders will make an effort to work out an arrangement with you prior to foreclosing on your property.

Once the property is actually sold in the foreclosure sale, the purchaser, whether it be the lender or a third party, can have you evicted from the house. Except in extremely unusual circumstances, once the foreclosure sale occurs there is nothing you can do to get your house back or the equity you may have lost as a result of the foreclosure.