What Is Wrongful Foreclosure?
Wrongful Foreclosure is a generic term that relates to specific violations of state and federal law that may cause a foreclosure to be wrongful. Wrongful Foreclosure cases are 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 statutory violations pursuant to new foreclosure statutes put in place after the first mortgage crisis. Once a house is sold at a foreclosure sale to a third party (a bonafide purchaser) the title to the property is only rarely returned and the wrongful foreclosure cause of action (by whatever means) becomes one for damages, but not possession. At Advocate Legal we help clients stop the foreclosure process whenever possible to avoid a change in title and retain possession. When there is sufficient equity in a property we can also provide investors to pay of the lender thereby allowing homeowners to benefit from their equity by getting the best price for their home at a regular sale.
Wrongful foreclosure includes loan modification abuse such as 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 with many sections renewed and modified as of January 1, 2019. It provides borrowers with significant additional rights before, during and after foreclosure including statutory damages when lenders commit certain 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 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 by systemically repositioning your assets from you to them. Armed with the right information, and with legal experts on 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 which occurs 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 standing 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 Litigation Support 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, Ventura, San Diego, Santa Barbara, Riverside, Contra Costa and Kern County and All of California
At Advocate Legal, our attorneys apply over a decade of legal experience in foreclosure litigation and unwavering dedication to help homeowners hold onto their properties and avoid foreclosure or eviction.