Antideficiency Protections Under 580b, 580d, and 580e Amended and Clarified

  Antideficiency protections have been clarified by July 2013 legislation amending Code of Civil Procedure sections 580b and 580d. SB 426 amends those sections and clearly provides that the prohibitions contained in sections 580b and 580d include collecting or even owing a deficiency. The amendment further clarifies that the prohibition extends only to the borrower and the borrower’s non-encumbered assets — not to 1) guarantors, pledgors, or other sureties; or, 2) that might be satisfied from other collateral pledged to secure the obligation. Continue reading

Borrower May Challenge Securitized Trust’s Ownership

  The Fifth Appellate District holds in Glaski v. Bank of America that a borrower may challenge a securitized trust’s claim to ownership of the deed of trust by alleging “the attempts to transfer the deed of trust to the securitized trust (which was formed under New York law) occurred after the trust’s closing date. Transfers that violate the terms of the trust instrument are void under New York law, and borrowers have standing to challenge void assignments of their loans even though they are not a party to, or a third party beneficiary of, the assignment agreement.” Continue reading

580b Purchase Money Antideficiency Protection Applies to Short Sales

  In a case of first impression, the Fourth Appellate District in Coker v. JP Morgan Chase Bank, holds that the antideficiency protections of Code of Civil Procedure section 580b apply to any loan used to purchase residential real property, commonly referred to as a “purchase money loan,” regardless of the mode of sale. Continue reading

580e Short Sale Antideficiency Protections Not Retroactive

  Code of Civil Procedure section 580e provides protection to homeowners from a deficiency judgment when a short sale has been approved by the lender. Originally the section provided protection only from lenders whose notes were secured by a first deed of trust. In July 2011, section 580e was amended to expand antideficiency protection in the event of a short sale to any deed of trust, including junior lienholders, if the holder of said deed of trust consented to the short sale and received proceeds from the sale as agreed. Continue reading

Davis-Stirling: Foreclosure Notice Requirements are Strictly Construed

  The Sixth Appellate District holds that the pre-foreclosure notice requirements of the Davis-Stirling Common Interest Development Act must be strictly construed to create a valid lien. Only valid liens may be recorded and subsequently foreclosed by the association. The case is Diamond v. Superior Court (Casa Del Valle Homeowners Association). The notice and procedural requirements can be found in Civil Code sections 1367.1 and 1367.4 and are summarized here.  Continue reading

Unpaid HOA Assessments: Your Rights Under Davis-Stirling

  Under the Davis-Stirling Common Interest Development Act the amount of any unpaid association assessment, plus the reasonable costs of collection, late charges, and interest, constitutes a debt of the owner. After complying with notice requirements an association may record a lien for delinquent assessments against the property of an owner. The lien may then be enforced through the nonjudicial foreclosure process applicable to powers of sale in mortgages and deeds of trust. Continue reading

Failure to Provide Notice of Redemption Rights May Void HOA’s Nonjudicial Foreclosure

  In Multani v. Witkin & Neal [See, also Multani v. Witkin & Neal Order Modifying Opinion (No Change in Judgment)] the Court of Appeal was presented with a question of first impression. Does a homeowner’s association’s failure to comply with the requirements of Code of Civil Procedure section 729.050, i.e., the associations failure to notify the owner of its redemption rights, sufficiently prejudiced an owner such that the owner can state a cause of action to set aside the foreclosure sale? Continue reading

Trustee’s Mistake in Opening Bid Amount Justified Refusal to Deliver Deed

  Nonjudicial trustee foreclosure sales are regulated by statute. The result is that, so long as the statutory scheme is strictly followed, trustee sales are final and cannot be undone. Procedural irregularities in the statutory foreclosure process coupled with an inadequate sales price may, however, allow the trustee to exercise discretionary authority to void the sale if the error is discovered prior to delivery of the deed. Continue reading

Under HAMP Successful Completion of Temporary Modification Requires Permanent Modification

  Under the federal Home Affordable Mortgage Program (HAMP) when a borrower enters into a trial period plan (TPP), a form of temporary loan payment reduction under HAMP, the borrower and lender enter into a Trial Period Agreement — a written contract enforceable under state law. If a borrower complies with the terms of a TPP, and the borrower’s representations remain true and correct, the loan servicer must offer the borrower a permanent loan modification. If the lender fails to offer a permanent modification the borrower may sue the lender or loan servicer for breach of contract as HAMP does not preempt or otherwise displace state law causes of action. West v. JPMorgan Chase Bank. Continue reading

Injunctive Relief for Failure to Comply with HUD Servicing Requirements

  In Pfeifer v. Countrywide Home Loans, Division Two, First Appellate District held that, although there is no private right of action for a lenders’ failure to comply with HUD regulations, offensive action is different from defensive action.

 The court determined that the deed of trust incorporated by reference the servicing requirements of HUD, including a face-to-face interview, and that the lenders had to comply with the servicing terms prior to conducting a valid nonjudicial foreclosure. Accordingly, the HUD servicing requirements are conditions precedent to the acceleration of a debt or to foreclosure.

  The plaintiffs could, therefore, seek to enjoin the lenders from proceeding with a nonjudicial foreclosure based upon the lenders’ failure to perform a HUD servicing requirement, i.e., a face-to-face interview.

  Tender is not required because the borrowers are seeking to enjoin a pending foreclosure sale based on the lenders’ failure to comply with the servicing requirements incorporated in the FHA deed of trust.

  The court also held, after a lengthy discussion of the issue, that merely giving notice of a foreclosure sale to a consumer as required by the Civil Code does not constitute debt collection activity under the Fair Debt Collection Practices Act.

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