Articles Posted in Foreclosures

Articles about foreclosures, including investing in foreclosures and wrongful foreclosure legal claims.

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Author: Staff

Investing in California real estate often involves renovations or new construction. Unless a real estate investor plans on taking a very do-it-yourself approach, this will require the assistance of contractors, suppliers, and design professionals like architects or structural engineers. You may even want to find a real estate agent with experience in renovations. In the event that someone who worked on a real estate project believes they have not received the contracted payment, California law allows them to file a mechanics lien on the property.

Mechanics liens can be troublesome for California real estate investors. They take priority over other liens, and state law sets a very short timeline for enforcement. Perhaps the most concerning feature for real estate investors is the ability of subcontractors to file a lien when the general contractor does not pay them. In that situation, the property owner is not at fault, but must still deal with the lien.

What Is a Mechanics Lien?

A lien is a legal claim that places a hold on real property, affecting any attempt to sell the property or obtain financing. Perhaps the most common type of lien is the one held by a mortgage lender on the property purchased with the lender’s money. If the property owner defaults on the loan, the lender can foreclose on the property. Foreclosure of a mechanics lien seeks to recover money owed to a person who worked on a real estate project.
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Author: Staff

The possibility of foreclosure has been a persistent reality for real estate owners for some time. Foreclosures often occur when property owners default on their mortgages. County or state authorities may also foreclose on a property after the owner fails to pay property taxes. In some situations, a homeowner’s association may foreclose for failure to pay fees or assessments, or for other breaches of the applicable covenants, conditions, and restrictions. For California real estate investors, foreclosure auctions could present an opportunity to acquire property below market price. Investors should be aware of the significant risks that often come with properties sold at a foreclosure auction, and they should carefully research any property before the auction date.

Judicial vs. Nonjudicial Foreclosure

California allows two types of foreclosure: judicial and nonjudicial. In a judicial foreclosure, the creditor or its agent must file a lawsuit and obtain a court order before they may conduct an auction. Nonjudicial foreclosure, which does not require a court order, is possible when the deed of trust signed by the mortgage borrower includes a “power of sale” clause. This clause authorizes a designated trustee to conduct a foreclosure, and essentially waives the borrower’s right to a court proceeding. Creditors must still meet numerous requirements regarding notice and opportunity for the borrower to cure a default.

Right of Redemption

From a real estate investor’s point of view, the most important distinction between judicial and nonjudicial foreclosure involves the borrower’s right of redemption:
– In a judicial foreclosure, the defaulting borrower can get the property back by paying the full amount owed to the lender, plus additional costs. The deadline to exercise this right is either three months or one year after the auction date.
– In a nonjudicial foreclosure, the borrower has no right of redemption. All sales are final, so to speak.
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Author: Staff

House flipping has been a popular form of real estate investment for several years, even inspiring several television programs. Unlike many types of real estate investments, house flipping is a very “hands on” process, often requiring a significant investment of time in addition to money. This includes not only repairs and remodeling, but also extensive research into the neighborhood and surrounding area. Once a prospective house flipper has done their homework, it can be a lucrative type of investment. San Diego real estate investors should consider both the potential risks and the possible rewards of house flipping.

What Is House Flipping?

Author: Staff

Real estate ownership, both residential and commercial, frequently involves financing some portion of the purchase price with a mortgage loan. Should an owner stop making payments to a lender, the lender can attempt to recover the balance of the loan through foreclosure:  the forced sale of the property at auction, often at a below-market price. This presents opportunities, but also risks, for real estate investors. Understanding the foreclosure process and the potential liabilities involved is essential for California real estate investors who are interested in “distressed” properties.

What Is a Foreclosure?

Author: Staff

In a recent California appellate case, a plaintiff sued multiple parties after the nonjudicial foreclosure of his home. The court sustained the defendants’ demurrer without providing leave to amend.

The plaintiff challenged the judgment against the bank that instituted the foreclosure sale and one of the entities that serviced the plaintiff’s secured loan. He argued that it was a mistake for the court to determine he hadn’t stated a cause of action against these two defendants and couldn’t amend his complaint to state a cause of action. The court affirmed the judgement.

The case arose in 2007, when the plaintiff borrowed $528 to refinance the loan on his home. The loan was reflected in a note that both parties signed, and it was secured by a deed of trust on his home. The deed of trust identified him as the borrower and also identified the lender, trustee, and beneficiary. It stated that the borrower understood the beneficiary held legal title to the interests specified in the deed of trust but had the right to foreclose and sell the property and take any action required of the lender, if necessary to comply with law or custom. It also allowed the note to be sold multiple times without giving the plaintiff notice.

The beneficiary entity assigned the note to Mellon Bank, which was a trustee for a securitized investment trust and one of the defendants. The assignment was signed by an assistant secretary and recorded. The trust was organized under New York laws and was governed by a servicing agreement that required a servicer to make certain advances on delinquent loans. One day after the assignment was executed, another entity recorded a notice of default, stating an owed amount of $35,254.26.

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