Legal Question in Real Estate Law in California

You are in deep trouble. You need to report the loan modification company to the authorities right away. It sounds like they are a scam. Let the DA deal with them.

Then you need to contact the lender directly, tell them what has happened and try to make a deal. If you have the money to pay anything to bring the loan close to current they may work with you. If you don't have any money, you should have filed for bankruptcy a long time ago. It may not save your house, but at this point it is the only thing fast enough to stop you losing it other than paying the money.

A "non-judicial" sale is the technical term for what we call a foreclosure sale. When you took out the loan you signed a mortgage document called a deed of trust. That deed of trust gave the lender the right to have the trustee take your house and sell it if you didn't pay the loan. No court action, no subpoena required. Kind of like a car reposession. If you've received the Notice of Trustee Sale you are probably less than 30 days from losing your house.

There are two kinds of foreclosures. Often, the lender can choose which to pursue. The two types are a judicial foreclosure, also called a court foreclosure, in which the creditor under the defaulted promissory note sues the borrower in court for foreclosure, and perhaps other matters such as a deficiency, loan-application fraud, waste of the collateral, or such matters. The other is a trustee's sale under a "power of sale" provision in a deed of trust.

Trustee's sales are quicker and cheaper, but the creditor/lender/beneficiary or whatever we'll call the foreclosing party is limited to selling the collateral and accepting whatever it gets from the sale as its only remedy (with rare exceptions).

The creditor will resort to a judicial foreclosure only if a trustee's sale won't accomplish its purposes. One possible reason is that the loan didn't include a power of sale provision. I have seen that in a couple of "private" loan deals put together by unsophisticated individual lenders, family-and-friends deals, and so forth. Occasionally, the parties have used an Eastern/Midwestern mortgage instead of a note and deed of trust as is generally done in California. 99% of loans will have effective power of sale clauses. Another common reason for going to court for foreclosure is that the creditor can often obtain a judgment against the borrower for any shortfall in the proceeds of sale at foreclosure, or for other reasons. A trustee has no power to grant judgments, nor can a lender go to court for a deficiency judgment after electing to foreclose by trustee's sale.

Neither method of foreclosure uses a subpoena. In the usual case, a trustee's sale, you'll get a Notice of Default followed, months later, by a Notice of Trustee Sale. You might get more than one sale notice, and you might get other notices, such as a Substitution of Trustee. In the less common instance of a judicial (court) foreclosure, you'll be served with a Summons and a Complaint, and perhaps a few other papers, but not a subpoena.

The most important thing for you to do now is to take note of the date set for the sale. This determines your right to redeem your home by paying the amount due - seven months of mortgage payments, additional interest, penalties, and the lender's costs for preparing to foreclose. This can be a huge sum, and the redemption deadline is normally five business days before the date set for the sale. Reinstatement after default is covered in detail in Civil Code section 2924c.