I’ve stopped making payments. Do I have time to short sell before foreclosure?

Even if it’s late, it may not be too late.

If you’ve stopped making payments, you’re right to wonder if there’s time to short sell your San Diego home before foreclosure.

The answer is probably yes, as long as you list it at the right price and with an agent who is skilled in handling short sales.

In most cases, you’ll have 60 to 90 days from the time of your last payment before your lender begins the foreclosure process.

The first step in foreclosure is recording the Notice of Default.

By law, you have at least 111 days from recording of the Notice of Default until the trustees sale. However, home loans that were made between January 1, 2003 and December 31, 2007 have an additional 30 days, during which the lender is required to make a “best effort” to contact you for the purpose of exploring ways to avoid the foreclosure.

The Notice of Default can only be filed after this 30 day period, and the lender must attest to having made contact or having made a best effort to make contact.

Thus, if your mortgage loan was made between January 1, 2003 and December 31, 2007, you have at least 141 days.

Here’s the legal timeline of events that must happen before a foreclosure is final:

Within 10 days after recordation, the lender must send a copy of the Notice of Default to the borrower by registered or certified mail.

At some time between day 86 and day 91, the lender must record the Notice of Trustee’s Sale. This notice sets forth the date, time, and place of the Sale – which cannot be sooner than 20 days after recording. This notice must include the total amount of the unpaid balance and reasonably estimated costs, expenses, and advances at the time of the initial publication of the Notice.

Every effort must be made to notify the borrower of the impending sale. After the notice is recorded it must be posted on the property, published for 3 consecutive weeks in a newspaper of general circulation, and mailed to the borrower by registered or certified mail as well as by first class mail.

Day 105 – or 135 if the loan is subject to the 30 day contact period – is the last day for the borrower to cure the default and reinstate the loan by catching up all back payments and paying the related fees, late charges, etc.

Note that this is 5 days prior to the trustees sale. If that sale is postponed – which is relatively common – then the date to cure the default is also postponed to a date which is 5 days prior to the trustees sale.

Note also that the borrower has the right to redeem the property by paying the entire balance due, including fees, right up until bidding begins at the trustees sale.

If you have a home in Carlsbad, Coronado, La Jolla, Rancho Bernardo, North County, Del Mar, Mission Hills, Kensington, Metro San Diego, or downtown San Diego and believe you should short sell, call 619-929-1413 or write td@tomdunlap.com.

We’ve created systems for presenting our short sale packages and we’ve developed relationships with the banks that allow our San Diego short sale requests to be processed faster than most, but it’s still best to have as much time as possible.

P.S. You may have read stories about San Diego homeowners who stopped making payments and stayed in their homes for more than a year before foreclosure. Those stories are true, but they are not a guarantee. It’s safest to proceed as if events will be carried out according to the legal timeline.

Please note that the information provided on this San Diego short sale page is generic, academic information used for general information purposes and may not be construed as or relied upon as a promise for a specific outcome.

This site provides information about real estate, law, income taxes and credit scores as relates to borrowers in distress, short sales and similar situations. The site is designed to help users safely cope with their own needs. Information is not the same as advice — the application of law or regulations to an individual’s specific circumstances. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a lawyer, tax adviser or other specialist if you want professional assurance that our information, and your interpretation of it, is appropriate to your particular situation. The models in photographs accompanying the testimonials on this website are used for illustrative purposes and are not a personal endorsement.