It is no secret that the United States remains in the throes of one of the worst “mortgage meltdowns” in history. The problem is so widespread that the numbers are almost hard to believe. The consensus is that it will take years for the effects of this economic disaster to be unwound through any process, whether free market, government run or a combination of both. Just days ago, CNBC reported that the monthly foreclosures for January was an ALL TIME HIGH. This story ran simultaneously with the emergence of allegations of widespread “robo-signing” borrowerrs into foreclosure without regard to the actual status of their loan.
In the case of the wrongful foreclosure, the fact pattern generally goes as follows. First, borrower takes out a mortgage on his property and lender takes back a promissory note and deed of trust. Second, the borrower misses one or two payments, or falls behind one or two payments, and then catches up. Third, the lender notifies the borrower that the loan is in default, fails to reinstate the loan, and begins to generate fees and costs that must be paid by the borrower — before the lender will reinstate its loan — including but not limited to: (1) attorneys fees; (2) default interest; (3) late charges; (4) appraisal fees and (5) other costs. The lender goes on to threaten the buyer with foreclosure if the buyer fails to pay all the banks fees and costs, in addition to the principal and interest on the underlying loan this is called reinstatement.
What’s the big deal? These “default” fees and costs are quickly piled on, eroding any equity that the borrower may have slowly built up on the property (in effect paying it to the Bank), draining the borrower’s bank account and leaving the borrower unable to make up the payments or resist foreclosure. On the bank side, it’s a beautifully profitable transaction, they bleed the borrower dry, and then take the property back. Additionally they could not even initiate foreclosure in California till they comply with civil code 2923.5. One problem…..it’s illegal.
The recent case against Bank of America was based on abusive practices such as these, and resulted in a settlement of $108 million, affecting nearly 200,000 borrowers!
In California, borrowers also have the protection of a special statute, California Civil Code Section 2924c. California Civil Code § 2924c applies to any obligation secured by a deed of trust on real property, and permits the trustor, who is in default under the terms of the deed of trust, to cure the default unilaterally, by paying to the beneficiary or the successor in interest:
“(A) all amounts of principal, interest, taxes, assessments, insurance premiums, or advances actually known by the beneficiary to be, and that are, in default and shown by the beneficiary to be, and that are, in default and shown in the notice of default, under the terms of the deed of trust or mortgage and the obligation secured thereby, (B) all amounts in default on recurring obligations not shown in the notice of default, and (C) all reasonable costs and expenses, subject to subdivision (c), which are actually incurred in enforcing the terms of the obligation, deed of trust, or mortgage, and trustee’s or attorney’s fees, subject to subdivision (d), other than the portion of principal as would not then be due had no default occurred…”
If the trustor cures the default pursuant to this section, then “all proceedings theretofore had or instituted shall be dismissed or discontinued and the obligation and deed of trust or mortgage shall be reinstated and shall be and remain in force and effect, the same as if the acceleration had not occurred”. Bottom line, if a borrower tenders payment to the lender as required under 2924c, reinstatement is mandatory!
A recently filed a class action in LA Superior Court against Greystone Bank for alleged violations of California Civil Code 2924c. Read Complaint. If you are a borrower that has been: (1) subjected to, or threatened with wrongful foreclosure, or (2) forced to pay improper fees and costs in order to avoid foreclosure, by Greystone Bank or Greystone Servicing Corporation, we would like to talk with you about your situation.
Also, if you have had a wrongful foreclosure experience with any other large bank, other than Greystone Bank or Greystone Servicing Corporation, we would like to talk with you about your experience as well. Call Southern California 909-890-9192 in Northern California 925-957-9797
Works Rights Compliance Alliance 