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When a trustee does not pay the mortgage the answer to what happens is simple. Unfortunately for the beneficiaries it means the lender will likely foreclose on the property. The mortgage must still be paid, even though the property is held in trust. In addition, California uses a non-judicial foreclosure process that allows for quicker proceedings than in many other states.

When a trustee does not pay the mortgage on property held in a revocable trust, you may experience the following:

  • A notice of default may be recorded at the recorder’s office in the county where the real estate is situated. This occurs on day one of the process.
  • On day 91, you will likely receive a notice of the foreclosure sale.
  • The last day to reinstate the mortgage occurs on day 106. Up until this day, you could pay all of the past-due amounts, plus expenses of the foreclosure process, in order to stop the foreclosure proceedings.
  • On day 111, the foreclosure sale may occur.

If the mortgage itself contains a power of sale clause, which lists the time, place, and other terms of the foreclosure sale, the lender must follow those provisions.

Since a non-judicial foreclosure sale can happen in as quickly as 111 days, the trustee of an Anaheim living trust must act fast. Waiting too long to take action could result in the loss of the real estate. The fact that the property is held in trust does not mean that the mortgage can be ignored.

In order to implement an estate plan properly, you must understand how a living trust works. Our guide, Understanding the Revocable Living Trust – In Language that Anyone Can Understand in 8 Minutes, provides valuable information about living trusts. To learn more, contact an experienced Anaheim trust administration attorney today at (714) 459-5481.

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