California real property foreclosures are totally different from foreclosures in New York and many other states. The reason is that more than 99% of the California foreclosures take place without a court action, in a proceeding called a "non-judicial foreclosure". Twenty-one states do not have a non-judicial foreclosure. [These states are CT, DE, FL, IL, IN, KS, KY, LA, ME, MD, MA, NE, NJ, NM, NY, ND, OH, PA, SC, UT, VT. - Source: realtytrac.com] In California, the lending institution can go through a non-judicial foreclosure in about 4 months from the date of the filing and recording of a "Notice of Default", ending in a sale of the property without any court getting involved. The California homeowner can stop the sale by making full payment of all alleged arrears no later than 5 days prior to the scheduled sale. Unlike a judicial foreclosure, the homeowner will have no right to redeem the property after the sale ("equity of redemption", usually a one-year period after judicial foreclosure and sale).
The problem I am going to analyze and discuss is under what circumstances can a homeowner/mortgagor go into court to obtain some type of judicial relief for wrongful or illegal conduct by the lender or others relating to the property and mortgage. My discussion applies as to all states in which non-judicial foreclosures are permitted.
There are three distinct stages that need to be separately discussed. These stages are the borrower's current situation. The three stages are:
- Homeowner is not in any mortgage arrears [declaratory judgment action]
- Homeowner is behind in mortgage payments - at least 5 days before auction [injunction action, which could even be called an action by a homeowner to "foreclose" upon or eliminate the lending institution's mortgage security interest]
- Property was sold at auction [wrongful foreclosure action]
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