how does a declaration of homestead affect the process of a trustee sale? Does some equity have to be given back to the foreclosed trustor after the sale up to the homestead exemption amount, or is it not relavent as a recording?
It is my understanding that in order for a Homestead to have an affect on a trustee sale the homestead would need to be recorded prior to the foreclosing Deed of Trust. There are not any institutional lenders that will lend money with a homestead in place and will require the homeowner to sign an abandonment of homestead before they will lend the money secured by that property.
Here’s a good thread on the Homestead topic > http://californiahomesteaddeclaration.com/questions.html
Homestead declaration exempts (protects) a portion equity from being attached by a judgment creditor. It appears that filing for Homestead status will have no impact when it comes to mortgage debt … hence no impact on a steps buyer (mortgage debt foreclosure). The amount of exempted [protected from creditors] equity under a Homestead is only $50,000 (in certain cases up to 300,000). However (again) mortgage debt is NOT protected by Homestead nor is any other lien recorded prior to the Homestead declaration.