This information is meant as an overview and is not a contract.

WILL I BE ABLE TO RECOVER ALL THE MONEY OWED TO ME THROUGH A FORECLOSURE?
The answer depends on several factors specific to each situation. The most important factor is the existence of sufficient value in the property so you have a protective equity. Another key factor is whether or not there are other liens on the property senior to yours. We will assist you in analyzing these factors and help you find the best strategy for your situation.

HOW MUCH WILL A FORECLOSURE COST ME?
Fees are set by California law and depend on the unpaid principal balance of the note you hold. Click here for a table. If you’d like an exact quote, we’ll be happy to provide you with one without any obligation. Click here to contact us for a quote. Once you decide to initiate foreclosure proceedings, we usually require a 30% deposit to start.

HOW LONG WILL IT TAKE TO COMPLETE THE FORECLOSURE?
If no one else is foreclosing on the property, it takes about four months. The answer is more complicated if another senior trust deed holder has initiated a foreclosure on the property. If this is the case, it depends on when that foreclosure started and it is imperative that you act quickly in order to have the most options for protecting your security and recovering your money.

WHAT IF THE PROPERTY HAS DECLINED IN VALUE?
Your note is secured by the property described in the trust deed. Thus any significant decrease in the property value will threaten your security. Many lenders become uncomfortable if the Loan To Value (LTV) ratio exceeds 65% for improved property or 50% for land. Often, there is little that can be done in a falling real estate market other than to monitor the loan closely so the debtor doesn’t fall too far behind before you take foreclosure action.

WHAT IF A LIEN SENIOR TO MINE HAS ALREADY BEGUN FORECLOSURE?
When a senior lien is permitted to complete foreclosure, all liens junior to it will be wiped out, leaving you with an unsecured debt. Therefore, if a senior trust deed has started foreclosure, you must act rapidly to protect your money. One option is to advance funds to reinstate the senior lien, and start your own foreclosure (any such advances are added to the balance due to you at the foreclosure auction).
Other options are available, but depend on the value of the property, the amount of any other trust deeds, and your own willingness to advance funds to protect your lien. We will be happy to discuss the options available to you.

WHAT IF A SENIOR LIEN HAS ALREADY COMPLETED FORECLOSURE?
Completion of foreclosure by a senior lien will wipe out the security of your trust deed, and leave you with an unsecured debt. At this point the only option left is a lawsuit which makes collection more expensive and less likely.

WHAT IF THE OWNER HASN’T PAID PROPERTY TAXES OR INSURANCE?
You may, but are not required to, pay delinquent real property taxes, and then add such advances to the balance due on your trust deed. With insurance premiums, most trust deed holders receive a 30-day notice of cancellation. In this case, you should advance the premiums and immediately start foreclosure.

WHAT IF THE PROPERTY HAS BEEN DAMAGED BY FIRE?
Most trust deed holders are named as a “mortgagee insured” on a fire/extended coverage policy. This gives you the right to insist that insurance money is used to repair any covered damage.

WHAT IF THE PROPERTY OWNER FILES BANKRUPTCY?
No foreclosure may start, or continue, while any debtor is in Bankruptcy, unless court approval is first obtained. Often a debtor will file Bankruptcy in the last few days of the foreclosure, in order to buy the maximum time. If this happens you will have to hire bankruptcy counsel in order to complete the foreclosure. We have bankruptcy attorneys we recommend in this event. In most cases, you can expect a cost of perhaps $1,000 to $1,500 plus a delay of perhaps four months.

WHAT IF THERE IS LITIGATION AFFECING THE OWNER OR THE PROPERTY?
Most often litigation involving the owners, such as divorce or a mechanic’s lien enforcement, will have no effect on the foreclosure. But if you end up taking the title back at the foreclosure sale, you may have to involve the title insurance company that guaranteed your loan.

WHAT IF THERE IS LITIGATION AFFECTING THE OWNER/PROPERTY?
Sometimes, before or during a foreclosure, a lawsuit is filed (such as a divorce action, a partnership disagreement or a mechanic’s lien). Most often it won’t directly affect you as trust deed holder and will have no effect on your foreclosure. In fact, your foreclosure most often will remove such lawsuits from public record, effectively wiping them out, in the same way it wipes out a junior trust deed.