Process is simple. If a borrower is behind on payments a bank can record a NOD. There is no court over-sight as this is only a public notice. The only time a court will get involved is if the bank ultimately chooses Judicial over non-judicial foreclosure. As long as there is enough value in the property to cover the bank, they will likely choose non-judicial. If the bank is in a 2nd or 3rd position, they may choose judicial so they can get a deficiency judgment in the event that the foreclosure sale does not cover their encumberances.
Can anybody share the legal process a bank must go through to file a Notice of Default? Is there any precusor paperwork that must be filed before the Bank can NOD? Also, which court generally is the court in which this info is filed and can anybody legally review those court documents before it is filed with the county recorder?
Foreclosure most commonly occurs non-judicially, without a court order, in CA. This is due to the fact that: (1) the accelerated speed allows a faster recovery of the lender’s debt, and (2) some classes of lenders are barred from pursuing a deficiency judgment even if they do foreclose judicially. In the residential market, judicial foreclosure on a debt secured by a deed of trust is almost unheard of.
The beneficiary of the deed of trust (lender) need only instruct the trustee to record a Notice of Default. You will find them in your county’s public records which may or may not be in the vicinity of your county Superior Court. In my county, I go to the County Clerk-Recorder’s Office up the street a bit from the actual courthouse. You should be looking for the same place where all public property records are recorded.
Whatever “precursor” paperwork is filed is a private matter between the lender and trustee. There is no publicly recorded document other than the Notice of Default that “triggers” foreclosure in California.
Do yourself a HUGE favor and look up First Tuesday. Buy their book called “Buying Homes in Foreclosure” for about $10. It is fairly advanced material, but it will help get you acquainted with the maze of laws and court cases that establish the boundaries of an equity purchaser’s conduct.
For an eye-opening examination of the process behind the trustee’s sale (non-judicial foreclosure) be sure to look up and read all of California Civil Code (CC) §2924. Be sure to also read CC §1695 the discusses the conduct of an equity purchaser (an equity purchaser is an investor buying an owner-occupied, one-to-four unit residential property in foreclosure for a purpose other than as a primary residence).