The problem with the right to reinstate your loan in California 5 business days prior to trustee sale.
The California Association of Realtors has put out a nice timeline dealing wiith the foreclosure timelines in California. This handy chart makes clear that a borrower has a legal right to reinstate their mortgage loan 5 business days prior to a trustees sale. Why then are we still getting calls from borrowers that (after being told to stop making their mortgage payments with the false hopes and/or promises of a loan modification) are then refusing to accept the borrower's mortgage payments, or allowing them to bring their loans current prior to the trustee sale?
I don't mean to sensationalize the issue. Most people know I am a real estate and foreclosure defense attorney, but it seems over the past month or two we have been getting more calls than normal on this topic. Is this a new trend in California real estate foreclosures or just new calls to the firm I don't know.
Either way, the California Civil Code (section 2924(e) reinstatement) clearly sets forth the legal right of mortage reinstatement, and some loan servicers seem to be willing to try to trick someone into a foreclosure sale, and perhaps more so if the borrower has equity in the property (yes, some California homeowners still have equity).
At any rate, this has got me reeling as we get last minute calls from frantic homeowners who are panicked and who are being denied their legal rights to reinstate. This is potentially risking the loss of someones home often from borrowers with securitized loans (i.e. MERS loans) who were merely trusting the loan servicers and their "foreclosure prevention" experts. I am getting a bit tired of this little game that appears to be going on and which may be a developing trend in California real estate. Once a foreclosure sale occurs, these trustee sales can be very difficult to reverse and difficult to set aside the sale. Often times the borrows will then raise the "tender" defense and argue the borrower needs to bring the ENTIRE loan current in order to attack the foreclosure sale. This is the stuff that goes on in foreclosure land.
We have even seen situations where, for example, the loan servicer buys the property at trustee sale, and then flips it to Freddie Mac (apparently trying to create a bona fide purchaser for value situation) making it even tougher to try reverse the trustee sale. In fact, right now we are dealing with a case similar to this where JP Morgan Chase and Freddie Mac did this exact 1-2 scenario. Some of these cases involve California elders such as a 80+ year old woman the bank now wants to evict after denying the legal right to reinstate the mortgage loan. This is pathetic and will raise issues of financial elder abuse and potentially a violation of the California Homeonwer Bill of Rights if not resolved.
Anyway, just want you to be on notice of that as a real estate professional. Don't let your clients wait to the last minute to address this legal right. We often get calls when its too late in the game.
We assist homeowners in foreclosure defense and predatory lending & loan servicing.
We can be reached at (877) 276-5084
Steve Vondran, Esq.