Reader’s Question:

When I am in judicial foreclosure, what happens if I do not file an answer to the lawsuit?

Richard

Daly City, CA

 

The lender gets a judgment by default in this case. The court will then appoints a referee to find the total amount due, including interest and attorney’s fees. Then the lender must put out an advertisement of notice of sale in the newspaper for 4-6 weeks. However, if after this process the total amount is still not paid, then a public sale will commence, headed by the referee, on the courthouse steps. The lender will then must advertise a notice of sale in the newspaper for 4-6 weeks. If the total amount due is not yet paid, a public sale is conducted by the county sheriff or another officer of the law on the courthouse steps. Other lenders or banks usually bid up to the amount of the owed debt at the sale unless there is significant equity in the property, the only bidder at the sale will be a representative of the lender. If no other buyers bid, then the lender will receive title to the immovable property in return. If the proceeds of the sale do not cover the amount owed still, then (in some states) the lender may issue a deficiency judgment against the borrower and all others that guaranteed this loan. This whole process can take sometimes as little as three months and as long as twelve months, depending on the volume of court cases.