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KJL LAW, Arbitrator
Category: Real Estate Law
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If I am a few months behind on my mortgage payment in

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If I am a few months behind on my mortgage payment in California and the mortgage company starts foreclosure proceedings, do I have a right to make up the payments and keep my home and stop the foreclosure?
What if there is an acceleration clause in the contract requiring me to pay the full price of the loan? Is that legal in California?

Hello and welcome to Just Answer. No attorney-client relationship or privilege is formed by speaking to an expert on this site, the answers are for general information. By continuing, you confirm that you understand and agree to these terms.

Most loans in California are secured by a deed of trust. The deed of trust is a security agreement making the property collateral for repayment of the loan to the bank. The deed of trust contains a clause called a "power of sale" which entitles the holder of the note to sell the house at a foreclosure sale outside of court.

Under California statutory law, the lender, must fulfill two steps in the foreclosure process before they can sell the house on the courthouse steps.

The first statutory step is to record a Notice of Default. The notice sets out the amount of the arrearage on the loan and gives you the borrower 90 days from recordation to pay the arrears and any costs incurred by the lender in initiating the foreclosure process. Under the law the payment reinstates the loan in good standing.

The second statutory step is to provide the borrower with a Notice of Sale, fixing the date the foreclosure sale will take place. Foreclosure sales are typically conducted on the steps of the county courthouse. To keep the property, the borrower must then pay the full amount owed on the loan, or reach some other deal with the lender.

Now you said that there is an acceleration clause in the note. Acceleration clauses are standard in loans secured by California real estate. The clause provides that on the happening of a listed event, the lender (or beneficiary) may call the entire loan balance due and payable immediately. The right to exercise the acceleration clause is at your lender’s option.

In California your lender can proceed with a judicial and non-judicial foreclosure. The lender can also waive the default, and decide not to accelerate.

However, under the law they can accelerate and exercise the power of sale under a non- judicial foreclosure hen the Notice of Default, which must be mailed to you, must expressly state that the lender is electing to accelerate. however, if they proceed as a non-judicial foreclosure, by statute you can “cure the default” and reinstate the loan by paying all delinquencies, plus fees and costs, as if no acceleration had occurred, and you would have to pay all of the past due amounts, late fees, etc. minus the acceleration amount.

Keep in mind that if they pursue a judicial foreclosure, the filing of the lawsuit acts as notice of he acceleration, and they can proceed even if you want to pay the arrears. at that point it is up to the court.

I hope this helps.

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