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I have a FHA refinanced (deed of trust) mortgage on a manufactured home in California, Due to cutbacks at my job I am not able to make the payments anymore. Can anyone tell me how to find out if my loan is non-judicial? Meaning how do I know for sure that the bank will not come after me if they are not able to recoup get the money owed on my loan.
What steps should I take to ensure I will not have to pay anything.
Thank you very much for your detailed answer, you have made me feel a little better about my situation.

1 Thought on Is my FHA mortgage non-judicial?
  1. Reply
    June 18, 2012 at 8:35 pm

    Each lender have their own procedures as to when to file a foreclosure against a person that is behind in their mortgage payments. Some file foreclosure immediately after one payment, some as long as 3-9 months or more after missing your first monthly payment.

    There are two types of foreclosures normally used in the United States

    Non-Judicial Foreclosure (90-98% of California mortgages are non judicial)

    Most lenders use the non-judicial foreclosure procedure. No courts or lawyers are involved.

    Under this procedure normally the lender has the right to sell the property after completing the foreclosure procedure. The lender, under this procedure can not normally sue for a judgment after the sale. You do not have the right to reclaim the house under any circumstance.

    Under a non-judicial foreclosure and the lender has decided to foreclose on you they issue a “Notice of Default/Foreclosure” this document is recorded at the county recorders office where the property is located.

    You will receive a copy of this notice in the mail as well as one will be delivered to your front door.

    At this point you now have 90 days to bring the mortgage current, refinance the mortgage or do what ever you want to do to keep your property. Your lender might entertain the idea of refinancing your mortgage for you at this stage.

    Once the 90 day period is over the lender then decides to record a “Notice of Sale” at the county recorders office. You will receive a copy in the mail as well as someone will deliver one to your front door. This notice will have a sale date and place of sale.

    Once this document has been recorded you now have 20 days in which to refinance or cure your foreclosure. Most lenders will not entertain the idea of refinancing their own loan once this document has been issued. Some might, but most will not. At this point the lender is interested in you paying the mortgage off or bringing it current.

    At the sale if the property is sold to someone, they have to get the property recorded in their name so there is lots of legal work to be done before they officially own the property.

    This new owner will contact you when all the legal documents are signed and between the two of you select a time for you to move. You might be required to pay rent for the time you stay there but this is between you and the new buyer.

    If the property does not sell then the lender has to get a few legal matters taken care of so they have to wait until the legal matters are completed. This normally take 5-7 business days or less.

    If this happens once all the legal matters are taken care of the lender normally hires a real estate agency to take care of their real estate sales.

    An agent from the agency will contact you about the date and time of your departure. In some instances they will offer you a sum of cash for you to move.

    If you are not required to go to court and has not received documents from a court stating that you must appear. This is probably the procedure being used by your lender.

    Judicial Foreclosure

    If the lender decide to use the judicial foreclosure procedure you will be issued a summons to appear in court. The court will set the time and date of appearance as well as when you will have to vacate the property.

    If the lender use the judicial foreclosure procedure they are allowed by law to file a deficiency judgment against you.

    Most lenders, though the law allow them to file for a deficiency judgment, do not do so. they would just rather sell the property, write any loss off and move on without other legal problems that might cost them money and then would have to collect on the judgment if they won.

    On the other hand the law also allow you the right to reclaim your house after the foreclosure procedure has been completed in some instances any where from three months and in some states up to a year.

    If you received a document stating that you have to appear in court and a date for you appearance has been set, your lender is probably using this procedure.

    This method of foreclosure is used only by a few lenders where both procedures are allowed.

    Under either procedure if the bank can not reclaim the entire loan amount from the sale of the property they claim they have a loss. Since this is a loss to them someone had to have a gain. You are the one considered having the gain, therefore the lender would then send you a 1099 indicating the amount of gain you had.

    Upon receipt of the 1099 you must file this gain with your year end taxes as to the amount of gain you have.

    For tax and legal matters you should always consult with your tax consultant and attorney.

    State law determine if the state is a judicial or non-judicial state not the type mortgage. A FHA mortgage in Florida is a judicial mortgage while in California is a non judicial mortgage

    I hope this has been of some use to you, good luck.

    “FIGHT ON”

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