A home purchase is one of the largest investments most people will make in their lives. Often, a home buyer will borrow part or all of the purchase amount of the home from a bank or other financial institution. When the buyer cannot make the payments on the loan, called a default, the lender can foreclose on the property.
In California, there are two types of foreclosures. A nonjudicial foreclosure occurs outside of court. It is used when there is a power of sale clause in a deed of trust. This clause gives the trustee authority to sell the home to pay off the loan balance at the lender’s request if the borrower defaults.
A judicial foreclosure is used by a lender when there is no power of sale clause and involves filing a lawsuit to foreclose.
Foreclosure litigation
Unless the buyer and the lender agree on how to cure the default on the mortgage, the foreclosure process is unlikely to stop without taking court action. Because California has a nonjudicial foreclosure process that lenders may use, it is usually the buyer who files a lawsuit against the lender for wrongful foreclosure or unlawful lending practices.
The lawsuit is filed in the court where the property is located and it asks the court to temporarily stop the foreclosure process while the lawsuit is pending, called an injunction. The court will generally set a hearing date quickly to determine whether an injunction should be granted.
If the property is sold by foreclosure, the buyer may still have an option to file a lawsuit against the lender to set aside the sale.
An experienced attorney can provide representation and answer questions about foreclosure litigation.