Fighting Hard to Protect California Homeowners Facing Foreclosure
Homeowners today face a variety of hardships that lead to mounting debt and the inability to make timely payments on their mortgages. Job loss or reduction in salary; unforeseen medical expenses; changes in loan terms, (for example, an adjustable-rate mortgage); and divorce, separation or the loss of a wage earner may all jeopardize your home. Many homeowners do not realize that they are not to blame for such circumstances and that they often have options other than foreclosure. At Advocate Legal, our attorneys are dedicated to helping you understand your rights and your debt relief options in Los Angeles County and throughout California. With decades of legal experience, we fight to prevent foreclosure and other unjust or unnecessary actions by banks and other lenders.
What Happens in Foreclosure?
A default occurs when a borrower stops paying his/her mortgage, regardless of hardship or any other reason. Foreclosure occurs if borrowers don’t cure their default by paying all their arrears plus late fees and penalties. Any time after three months (this varies by state), your lender will begin foreclosure and you will receive a notice of default or be a defendant in a foreclosure lawsuit. Whether you are required to come to court as a defendant, or simply receive foreclosure notices, will depend on whether your foreclosure is judicial or non-judicial. This will depend on the state you live in and whether your state operates under lien theory or title theory.
- Non-judicial foreclosure —This type of foreclosure is an out-of-court process that occurs in title theory states and is not supervised by the court, but is controlled by statute.
- In title theory states, the borrower gives up title to the property under a deed of trust, and the title is held in trust by the trustee who is a third party to the agreement until the debt is paid off. This third-party trustee, under the direction of the lender, will utilize the power of sale clause in the deed of trust to conduct a non-judicial foreclosure sale.
- An important benefit of a non-judicial foreclosure is that lenders may not pursue deficiency judgments against borrowers for purchase-money loans secured by real property.
- Non-judicial foreclosure is the main method of foreclosure in California.
- Judicial foreclosure — This type of foreclosure occurs in lien theory states where the borrower retains title to his/her property, and a mortgage is considered a lien against the property.
- In lien theory states, the borrowers have mortgages, not deeds of trust. There is no trustee, and the lender must sue the borrower in court to foreclose.
- In lien theory states, the lenders are sometimes allowed to pursue deficiency judgments against the borrower.
- In judicial foreclosure, the burden is on the lender to prove that he/she has the right to foreclose. These are states where the “show me the note” argument may be effective if there are breaks in the chain of title.
What Is Wrongful Foreclosure?
Wrongful foreclosure is fact-specific and may be based on the lack of standing to foreclose due to a void assignment of the deed of trust, mistakes on the recorded documents attributable to fraud or negligence, or on statutory violations. Once a house is sold at a foreclosure sale to a third party (known as a bonafide purchaser), a wrongful foreclosure cause of action becomes one for damages, not possession. We help clients stop the foreclosure process whenever possible and retain possession.
Wrongful foreclosure includes loan modification abuse. It may also occur when lenders and servicers engage borrowers in the loan modification process by taking trial payments, by offering trial payment plans, or by promising modification and then breaching these promises.
The California Homeowners Bill of Rights was enacted on January 1, 2013. It provides borrowers with significant additional rights before, during and after foreclosure including statutory damages when lenders commit statutory violations.
Your Rights Pre-Foreclosure
California Civil Code §2923.5 requires a servicer to contact the homeowner about foreclosure alternatives before recording a notice of default. It also allows the borrower an opportunity to pursue some alternative to foreclosure. Homeowners may have many possible alternatives to foreclosure including:
- Loan modifications, including modifications under the Making Home Affordable (MHA) programs
- Mediation under a court-approved program
- Mortgage loan forbearance for temporary hardship
- Refinance, sale, short sale or deed in lieu of foreclosure
- Reinstatement after the Notice of Default
The business of mortgage lenders is not to do what is best for the homeowner but to maximize their own profits bysystemically repositioning your assets from you to them. With a knowledgeable foreclosure attorney by your side, you can aggressively protect your home from being sold by your lender.
Even if your lender has refused you a reasonable loan modification, you may have grounds to stop a foreclosure sale. Homeowners may sue a lender based on violations of statutes, breach of contract or promissory estoppel if the lender promises trial payment plans or loan modification agreements to the homeowner but fails to fulfill the promise. Depending on the case, results may include loan rescission, modification, money damages or a trial.
Just because the bank has proceeded with a foreclosure does not mean the homeowner is out of options. In certain cases, a lender may not have had to stand to foreclose on a property, thereby giving the homeowner the right to sue for wrongful foreclosure and money damages. In addition, when your home is purchased at a foreclosure sale or auction, the purchaser must still go through a formal eviction process. Through Los Angeles eviction defense, homeowners may have another opportunity to fight to remain in the home for as long as possible.
Get the Help You Need Against Lenders in Los Angeles, San Bernardino, and Riverside Counties and All of California
At Advocate Legal, our attorneys use legal experience, real estate knowledge and unwavering dedication to justice to level the playing field against big lenders who take advantage of overburdened homeowners.