After a Forefclosure Sale, the Lender's "Goof" That Can Give You Your Property Rights Back

 

Issues that arise from a foreclosure proceeding i.e. when a lender declares your loan to be in default, through the trustee sale of the property often presents a daunting and overwhelming task for the borrowers.  Under most circumstances the borrower is overwhelmed and completely at the mercy of the lenders. However, a homeowner (borrower) can make this circumstance akin to a David and Goliath scenario, if the borrower seeks and use the right sling-shot to curb the lender’s goof.

To ameliorate the effect of the uneven playing field between the lenders and the borrowers, the California legislators created certain statutory protections in order to assist the borrower from complete and an unfettered annihilation by he almighty lender.  In California most of this protections can be found under the California Civil Code (C.C.P) Sections 2924 and related code sections that could be triggered by either one or more violations originating from C.C.P Section 2924.  This statutory protection requires the lender to go through certain step-by-step requirements in order for a foreclosure sale to be valid.  In fact the California Supreme Court has held that the provisions of C.C.P Section 2924 must be strictly complied with.

Some of these statutory provisions include, but not limited to, how the lender should transfer your loan to a new lender, when a trustee legally acquires the authority to conduct a foreclosure proceeding on the property.  Where the process is not done in accordance to the statutory provisions, the courts have held that the trustee has no authority to conduct the foreclosure sale and hence the foreclosure sale is void.  Further, where a new lender acquires a loan or where your loan gets transferred to a new lender or beneficiary, and if the new lender or beneficiary does not provide the borrower with the required notice, the law is that the borrower has no obligation to make mortgage payments to the new lender.  If so, this new lender has no authority to declare your loan to be in default or initiate a foreclosure proceeding on your property.

There is the stack of documents called the deed of trust and Note that borrowers execute, without reading or understanding the contents that forms the contract or agreement between the borrower and the lenders.  However, the content of that agreement cannot abridge the   statutory protections.  Summarily a foreclosure would be found to be invalid if the lender failed to comply with these statutory protections.  Precedent cases from California courts in some cases have declared such foreclosure sale as either void or voidable. 

Contrary to your assumption, the lenders or their agents i.e. the trustees makes several errors in following through with these statutory procedures.  In my trial of October, 2009, the judge agreed with me and ruled that the trustee i.e. lender’s agent had no authority to initiate the foreclosure proceeding and therein prevented the lender from taking possession of the property from my client.

Start your inquiries as soon as you receive a notice of default from the trustee, even after your have lost your property to a foreclosure, you can review the foreclosure proceeding to ascertain if it was conducted in compliance with the statutory provisions.  You may still be entitled to series of remedies if the lender or its agent-trustee jumped the gun.  It happens more that you can imagine, and if that happens to be your scenario, you will be entitled to redress those violations from the invalid and unlawful foreclosure on your property.  These statutory protections were prorogated by the legislators to assist the borrowers from losing their most precious investment to the almighty lenders without some checks and balances.   Good Luck.

Gerald O. Egbase, Esq, Attorney At Law- Los Angeles, California