19 Oct Wrongful Foreclosure – What It Is and How You Can Fight It
In 2011, The Huffington Post reported on two California women, Laurie Pinkerton and Lisa Peterson, who faced unlawful foreclosure. Both were homeowners struggling to pay their respective mortgages. Both contacted their bank, who assured the women that it would review their modification applications before they would lose their homes. Both lost their homes before their loan modification applications were reviewed. This is an example of wrongful foreclosure.
Unfortunately, wrongful foreclosures do happen. Homeowners who receive foreclosure notices often panic; this is their home—where they raised their children, created memories, and felt a sense of satisfaction and security—so the foreclosure notice is difficult. It is even more difficult when the foreclosure is erroneous. However, there is hope. Homeowners can fight wrongful foreclosure.
Fighting wrongful foreclosure can be a very difficult process. Homeowners may be confused where to start, what questions to ask, and what information to trust. Therefore, homeowners facing wrongful foreclosure should contact a lawyer who is knowledgeable in both real estate and foreclosure matters.
Wrongful Foreclosure Explained
In California, wrongful foreclosure action typically occurs when the lender initiates a nonjudicial foreclosure against a homeowner when the lender has no legal cause. Nonjudicial foreclosures are contract-based foreclosures, meaning that a clause in the contract allows the lender to foreclose without filing a lawsuit. This is called a power-of-sale clause within the mortgage or deed. California law outlines when lenders may start the foreclosure process. A lender who forecloses outside of those standards committed wrongful foreclosure.
Process for a Wrongful Foreclosure Action
To initiate a wrongful foreclosure action, the borrower files a wrongful foreclosure action with the court against the service provider, the holder of the note, and the trustee, by contending that there was an illegal, fraudulent, or willfully oppressive sale of property under the power-of-sale clause. In addition to actual damages, the borrower can also seek damages for emotional distress and ask for punitive damages.
Fighting Wrongful Foreclosure
To fight wrongful foreclosure, a borrower can allege various causes of action. An attorney will be required because the wrongful foreclosure process is complex. The following are common causes of action for wrongful foreclosure:
- Improper notice to the homeowner. California foreclosure law requires that lenders not serve a Notice of Default, or NOD, until thirty days after contacting the borrower to assess the borrower’s situation. Lenders must file an NOD with the county recorder to initiate a foreclosure action. If a lender serves an NOD within thirty days of contacting the borrower, then the borrower can initiate a wrongful foreclosure action and stop the foreclosure.
- Not mailing the homeowner. The NOD must be mailed to the borrower and other relevant parties. If the borrower is not notified through the NOD process then the foreclosure is wrongful.
- Failure to provide payoff figures. The NOD must include the amount owed and the date by which the homeowner/borrower can pay off the debt to avoid foreclosure. Not providing that information is against the law and can stop a foreclosure action.
- Refusing to discuss alternatives. California law requires the lender to discuss foreclosure alternatives with the borrower, if the borrower requests such a conversation, before starting the foreclosure process. Foreclosure alternatives include government-sponsored foreclosure assistance programs, ways to reduce mortgage payments, and deed in lieu of foreclosure options. Refusal to discuss these options and then foreclosing is wrongful. If this happens, a borrower can present as such to a court and stop the foreclosure process.
- Single point of contact. California law requires that all borrowers have a single point of contact at the bank or lending entity that is familiar with all aspects of the borrower’s case. That person can answer all of the borrower’s questions and provide information and answers to issues such as loan modification. Failing to provide a single point of contact is against the law and allows for a wrongful foreclosure action.
- Refusing to consider a loan modification request. Lenders must consider requests for a loan modification. Not considering such requests and foreclosing on a property is wrongful.
Wrongful foreclosure can happen to anyone. California law regulates foreclosure and requires lenders to follow a process. If the lender does not follow the process, then the borrower can fight the foreclosure through a wrongful foreclosure action.
If your home has been foreclosed improperly or you have concerns about the process, contact RA & Associates at 1-888-504-1551 or [email protected] for the legal experience and knowledge to help you keep your home.
RA & Associates
505 N. Brand Blvd.
Glendale, CA 91203
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