JUDICIAL FORECLOSURE

California does offer judicial foreclosures, or foreclosures that go through the court system, but they’re rare. They are much slower and more expensive than nonjudicial foreclosures. If your home is sold through a judicial foreclosure, you will be liable for the “deficient balance”.  The deficient balance is the difference between what you owe, inclusive of any and all fees,  and what your house sells for at auction.

Deficient Balance

Let's say that you owe $300,000 on a property that is going to auction.   If the house sells for $200,000 at the auction, you'd be on the hook for the $100,000 difference. 

Right of Redemption
 

In a judicial foreclosure, you also have the "right of redemption".   This means you can purchase your home back from whoever bought it at auction.  If there was no deficiency, you may repurchase your home for up to 3 months after your home is auctioned.   If there was a deficiency, you can purchase your home for up to 1 year after auction.   

 

However, if the lender waives it's right to a deficiency judgement, you will not be able to repurchase the home at all.   

In other words, if you owed the bank $200,000 going into the auction and the house only sold for $180,000, you’d be on the hook for the $20,000 difference.In a judicial foreclosure, you also have the “right of redemption.” That means you can repurchase your home from whoever bought it at auction. If there was no deficiency, you may repurchase your home for up to 3 months after the sale. If there was a deficiency, you can purchase your home for up to 1 year after the sale. However, if the bank has waived its right to a deficiency judgment, you won’t be able to repurchase the home at all. If you do want to redeem your home, you’ll have to pay the amount the bidder paid at auction plus anything you spent on repairs, insurance, and other expenses, plus interest. In other words, it’s very difficult to redeem a home even if you qualify.