Introduction — Why this matters now
Facing a foreclosure is stressful whether you own or rent. This guide explains practical defenses and options available in California: how tenant protections and the Homeowner Bill of Rights affect evictions after a sale, what "redemption" means (and when it does not apply), and how bankruptcy filings can temporarily or permanently change the outcome. Read this to learn immediate steps you can take and which legal tools can buy time or preserve your home.
Key takeaways (at a glance):
- Most California mortgage foreclosures are nonjudicial — there is generally no post-sale right of redemption for the borrower after a nonjudicial trustee sale.
- Tenants in foreclosed properties have federal and California protections, including minimum notice rules (typically at least 90 days) in many cases.
- Filing bankruptcy triggers the automatic stay, which usually stops foreclosure activity immediately until the court rules otherwise.
Homeowner options before and during a trustee sale
If your lender has recorded a Notice of Default or scheduled a trustee sale, act quickly. California law and practice give homeowners several meaningful opportunities to stop a sale or limit damage:
1. Reinstatement and loss-mitigation
You can usually reinstate the loan (pay past-due amounts, fees and costs) up to a short time before the trustee sale — commonly until five business days before the sale date — to stop a nonjudicial sale. Ask your servicer in writing for the exact reinstatement amount.
2. Loan modification, forbearance, and short sale / deed in lieu
Apply for a loan modification or other loss‑mitigation option immediately. California’s Homeowner Bill of Rights imposes servicer duties (single point of contact, reasonable processing timelines and limits on dual-tracking while a completed application is pending). Contact a HUD-approved housing counselor for free help preparing applications.
3. Redemption: limited and rare for mortgage trustee sales
Redemption — paying the full sale price or loan to reclaim a foreclosed home after the sale — is generally not available after a California nonjudicial trustee sale; it remains possible only in limited judicial-foreclosure scenarios or certain tax foreclosures. Don’t assume you can "redeem" after a standard trustee sale.
4. Mistakes and legal defenses
Servicer or trustee errors (notice failures, improper assignments, dual-tracking) can create defenses or delay. If you suspect procedural defects, consult a foreclosure-defense attorney or legal aid right away — a timely, well-documented challenge can sometimes reopen loss-mitigation or stop a sale.
Tenants, evictions after foreclosure, and bankruptcy as a tool
If you rent a property in foreclosure, your rights differ from the homeowner’s, but there are important protections:
Tenant protections (federal and California)
- The federal Protecting Tenants at Foreclosure Act and implementing guidance require successors in interest to give certain tenants at least 90 days’ notice to vacate (and in many cases honor existing bona fide leases). State law and California’s Homeowner Bill of Rights reinforce similar or stronger protections. These rules mean new owners usually must initiate eviction proceedings rather than changing locks immediately.
Bankruptcy: how it helps homeowners (and sometimes tenants)
Filing a bankruptcy petition (Chapter 7 or Chapter 13) triggers an automatic stay under 11 U.S.C. § 362, which ordinarily halts foreclosure and eviction actions while the case is pending. The stay is immediate but not always permanent: a creditor may move for relief from the stay, and outcomes depend on case type and plan.
Chapter 7: Often delays sale for months and may provide breathing room, but does not usually allow curing mortgage arrears through a plan (so it’s not typically a long-term way to keep a house).
Chapter 13: Allows a "cure and maintain" plan to repay arrears over time and can bind the mortgagee once the plan is confirmed — the classic option for debtors who can afford ongoing mortgage payments plus a payment toward arrears. Recent Ninth Circuit precedent clarifies a potentially significant Chapter 13 tool: where a mortgage or junior loan matures during the plan term, the plan may bifurcate and 'cram down' the claim under 11 U.S.C. § 1322(c)(2), subject to eligibility and timing rules. That decision (Mission Hen v. Lee) was affirmed by the Ninth Circuit and is an important development for some debtors in this circuit.
Important: cramdown rules are complex; primary-residence cramdown remains constrained in many situations, but the Mission Hen line of authority expanded options for short-term junior loans that mature inside the plan period. Speak with an experienced bankruptcy attorney to evaluate whether Chapter 13 can preserve your home.