The economy is shockingly bad and people around the country are struggling to stay in their homes. If your home is involved in foreclosure proceedings, it is important to understand the different types of relief you can obtain in order to save your home.
Our experienced Modesto bankruptcy attorneys can give you the information you need and help guide you through your Modesto foreclosure defense.
The court in Kekauoha-Alisa v. Ameriquest Mortgage Company says that if your home is in foreclosure and you file for chapter 13 bankruptcy in Modesto, there is an immediate stay imposed on the sale of the property. However, it is critical for the lender to notify the public of any postponement of the foreclosure sale.
Foreclosure is running rampant in California. There are several different forms of foreclosure, but there are two that are more common in California. These two forms of foreclosure in California are judicial foreclosures and non-judicial foreclosures. Judicial foreclosures involve cases where the lender files suit to have the property foreclosed on and is a court action against the owner/borrower.
Considering the increasing amount of borrowers who are defaulting on their mortgages, there was the creation of a second form of foreclosure. Non-judicial foreclosure was created to avoid the stigma of being sued and the judicial inefficiency created by the large number of foreclosures. Non-judicial foreclosures do not involve a lawsuit or court proceedings. Instead, the borrower gets notice of the lenders intent to sell the property, and if the borrower is not able to pay the amount they are in default, then the property is sold in a foreclosure sale. Upon the sale, the lender then gets the proceeds and does not seek damages from the borrower. In California, non-judicial foreclosure is regulated by the Civil Code 2924.
Foreclosure sales are frequently postponed because of possible negotiations. The only way to fully stop a foreclosure sale is to pay the pending default amount or to file for bankruptcy.
The Ninth Circuit Court of Appeals has recently heard a case where the application of California statute in non-judicial foreclosure sales was discussed. See Kekauoha-Alisa, et al. v. Ameriquest Mortgage Company, et al., No. 09-60019 (9th Cir. Mar. 26, 2012). Kekauoha-Alisa (Borrower) refinanced her home and executed a promissory note with Ameriquest Mortgage Company (Lender). After defaulting on this loan, borrower commenced foreclosure proceedings and scheduled the foreclosure sale of the property.
Three days before the sale, borrower filed for bankruptcy. As stipulated in state statute, once bankruptcy is filed the sale of any property involved in the bankruptcy is stopped. Statute and the mortgage contract further stipulated that in order to postpone the foreclosure sale, the lender or the lender's representative must make a public announcement of the postponement for it to be valid. Lender knew of this procedural requirement and complied three times. However, on the fourth time the lender sent a company secretary to the auction to postpone the sale and she did not do it correctly.
The court explains that it in order to provide sufficient notice of the sale postponement, the lender or the lender's representative must announce to the potential buyers or post notice.
After petitioning the court for relief from the stay, the court gave the lenders permission to auction of the property. The home was sold and soon after the borrower filed suit against the lender. Borrower argued that by failing to provide notice at the auction, the lender breached the term of the mortgage, breached the non-judicial foreclosure statutory requirements, and engaged in unfair and deceptive business practices.
The Circuit Court looked to California law to guide their decision. In California, when the lender fails to provide the public with notice of the postponement of a foreclosure sale, the postponement is not considered valid or proper. If the lender fails to provide proper postponement, it can be argued that they are engaging in unfair and deceptive trade practices.
Because the lender failed to provide proper notice, the court inferred that the postponement was invalid and thus the lender was engaged in unfair and deceptive business practices. Borrower was able to have the sale of her home voided.