Under HAMP Successful Completion of Temporary Modification Requires Permanent Modification

Posted on March 18, 2013 by Michael Daymude

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

Posted on December 19, 2012 by Michael Daymude

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.

Jump to top

Loan Servicer May Pursue Judicial Foreclosure in Own Name

Posted on August 14, 2012 by Michael Daymude

In California a secured lender has two foreclosure options if a note is secured by a deed of trust or mortgage: 1) non-judicial foreclosure and 2) judicial foreclosure. The great majority of lenders proceed by non-judicial foreclosure because it is less expensive and relatively quick. However, there are circumstances where a lender might proceed by way of judicial foreclosure such as when the deed of trust does not contain a power of sale, the lender seeks a deficiency judgment, or the lender has been sued by the borrower. Judicial foreclosures are governed by Code of Civil Procedure section 725a et seq. Continue reading →

Modification of Note Does Not Change Its Nature

Posted on August 3, 2012 by Michael Daymude

Code of Civil Procedure section 580b provides that no deficiency judgment shall lie after a sale of real property under a deed of trust given to the vendor to secure payment of the balance of the purchase price of that real property. Section 580b was drafted in contemplation of the standard purchase money transaction, in which the vendor of real property retains an interest in the land sold to secure payment of part of the purchase price.

In Weinstein v. Rocha the court confirmed the breadth of section 580b. It held that a written settlement agreement, wherein the parties intended to modify the terms of a promissory note given to the seller to secure payment of part of the purchase price, was simply a modification of the note, not a separate obligation. The settlement agreement did not change the nature of the note — a seller financed note secured by a deed of trust.

Seller’s remedy, therefore, was limited to foreclosure of the security. If that security is valueless by virtue of the foreclosure of a senior lien, section 580b applies and prevents any deficiency judgment on the note.

Thinking of Buying Real Property at Foreclosure? Think again.

Posted on July 17, 2012 by Michael Daymude

If you purchase real property at foreclosure, you might just buy yourself a lawsuit and nothing more. The trustee’s deed, by which you acquire title, is without warranty and is subject to any defects in title, including those which may not appear of record. While you may have a defense to certain claims if you are a bona fide purchaser, it is very costly to defend even frivolous lawsuits. If the claim is colorable and one for which the claimant has title insurance, chances are it will be very expensive to defend. If you lose, you will lose the property too. The notice of pendency of action will certainly put a wrench into any plans you have to resell or borrow against the equity.

Only very sophisticated investors, with enough financial backing to support lengthy and contentious litigation, should consider purchasing real property at foreclosure and then only after thoroughly vetting the chain of title and comparing it with a preliminary title report. Still, that may not be enough. Only an abstract of title or title insurance, not a preliminary report, offers protection if the representations in the report turn out to be inaccurate. Unfortunately, either may be difficult or impossible to obtain for the purchase of real property at auction, or the cost for a tenuous auction purchase might be considered too high.

If you have read this advice too late, or discounted it, and purchased property at foreclosure, and have also bought a lawsuit, give me a call. I am here to help.

I consult with clients and accept cases involving foreclosure, trustee sales, and lien priority, including quiet title and wrongful foreclosure actions. For other types of cases I accept, please scroll my “Home” and “My Practice” pages. If you are seeking a legal consultation or representation, please give me a call at 818-971-9409. – Michael Daymude

Jump to top

New California Homeowner Bill of Rights

Posted on July 6, 2012 by Michael Daymude

The legislature has passed two pieces of legislation which together are known as the Homeowner Bill of Rights. They are awaiting Governor Brown’s signature and will take effect, if signed, January 1, 2013. Continue reading →

Homeowner Properly Alleged Violation of Civil Code Section 2923.5 as Basis for Wrongful Foreclosure

Posted on July 5, 2012 by Michael Daymude

The Sixth District in Skov v. U.S. Bank National Association finds a private right of action for violation of Civil Code section 2923.5. Section 2923.5 provides that a mortgagee, trustee, beneficiary, or authorized agent must contact the borrower “in person or by telephone in order to assess the borrower’s financial situation and explore options for the borrower to avoid foreclosure” or satisfy due diligence requirements before a notice of default is filed. Accordingly, the trial court which sustained a demurrer to plaintiff’s causes of action for wrongful foreclosure, unlawful business practices, and declaratory relief, erred. Whether a defendant has complied with a statute such as section 2923.5 is a question of fact which, when disputed, cannot be determined on the basis of recitals in judicially noticed recorded documents. The court also held that section 2923.5 is not preempted by the National Banking Act. Chalk one up for homeowners.

I consult with clients and accept cases involving allegations of wrongful foreclosure, including those alleging violations of Civil Code section 2923.5. For other types of cases I accept, please scroll my “Home” and “My Practice” pages. If you are seeking a legal consultation or representation, please give me a call at 818.971.9409. – Michael Daymude

Jump to top

Demolition of a Building, Which Impairs Security, May Constitute Waste

Posted on June 28, 2012 by Michael Daymude

The owner of a parcel of real property with a building on it demolishes the building to make way for new development. Unfortunately, the owner is unable to complete the development and ends up defaulting on a purchase money promissory note secured by a deed of trust on the property. The holder of the note and DOT exercises the power of sale under the DOT and buys the property back at a foreclosure sale for less than the amount due under the note. The note holder then sues the former owner and others for waste and impairment of security based on their demolition of the building, seeking as damages the loss of value in the property that resulted from the destruction of the building. Is such an action barred by the antideficiency statutes? Continue reading →

Immediate Assignee of Junior Single Lender Piggyback Loan Not Subject to Section 580d

Posted on June 21, 2012 by Michael Daymude

Sold-out, nonpurchase money junior lienholders are generally able to sue the borrower on their note once their security has been rendered valueless by a senior lienholder’s nonjudicial foreclosure sale. A judicially created exception to this rule is when the same lender is both the senior lienholder and the junior lienholder. In that circumstance, it has generally been held that Code of Civil Procedure section 580d precludes a deficiency judgment and, therefore, the lender cannot sue the borrower on the junior note. Moreover, a single lender cannot avoid the application of section 580d by assigning the junior loan to a different entity after the trustee’s sale on the senior lien.

But, what about the circumstance when a single lender contemporaneously makes two nonpurchase money loans secured by two deeds of trust referencing a single real property and soon thereafter assigns the junior loan to a different entity, can the assignee of the junior loan, who is subsequently sold-out by the senior lienholder’s nonjudicial foreclosure sale, pursue the borrower for a money judgment in the amount of the debt owed? Continue reading →

In Danger of Foreclosure? Do Not Wait Until It’s Too Late

Posted on June 15, 2012 by Michael Daymude

I have previously posted about the difficulty foreclosed homeowners face when pursuing claims for alleged wrongful foreclosure. Increasingly, foreclosed homeowners are finding the courthouse doors closed. Claims and causes of action that at one time seemed viable, due to the lack of guidance from California’s appellate courts, no longer get past an initial demurrer. Continue reading →

Michael Daymude

Virtual Lawyer – "Representation Made Easy"

Category Archives: Foreclosure

Under HAMP Successful Completion of Temporary Modification Requires Permanent Modification

Injunctive Relief for Failure to Comply with HUD Servicing Requirements

Loan Servicer May Pursue Judicial Foreclosure in Own Name

Modification of Note Does Not Change Its Nature

Thinking of Buying Real Property at Foreclosure? Think again.

New California Homeowner Bill of Rights

Homeowner Properly Alleged Violation of Civil Code Section 2923.5 as Basis for Wrongful Foreclosure

Demolition of a Building, Which Impairs Security, May Constitute Waste

Immediate Assignee of Junior Single Lender Piggyback Loan Not Subject to Section 580d

In Danger of Foreclosure? Do Not Wait Until It’s Too Late

Related posts:

Related posts:

Related posts:

Related posts:

Related posts:

Related posts:

Related posts:

Related posts:

Related posts:

Related posts: