Mortgage Law in California
A lawyer may be able to defend you against the foreclosure of your home. At the Law Office of J. Arthur Roberts, we utilize several different tactics and theories in our efforts to help our clients save their home. Whether there is a basis for a lawsuit depends on the specific facts of your case. If the lender violated the law, an attorney may be able to help. At our firm, we help homeowners throughout California from our offices in Newport Beach, including those throughout Los Angeles and Orange County and the surrounding areas.
Mortgage Law & Tips by a California Debt Relief Attorney
Did the Lender violate the disclosure provisions of the Federal Truth in Lending Act?
“If so, you may have the right to cancel or ‘rescind’ your mortgage loan” - Attorney Joseph Arthur “Joe” Roberts
Information about the Truth in Lending Act (TILA) (15 U.S.C. §§ 1601-1667f):
In 1968, Congress enacted the Truth in Lending Act (TILA) as part of the Consumer Protection Act. The purpose of TILA was to provide adequate protection to consumers who were facing credit transactions; it was designed to require clear disclosure – making all of the arrangement’s key terms and costs completely transparent. Ultimately, TILA was created to allow creditors to have a “price tag,” which would allow them to compare to the cost of credit. It was created to help minimize confusion, as well as discourage fraud. It was the goal to also actively eliminate any acts of deceptive, unfair business practices that harmed consumers.
Regulation Z of the Real Estate Settlement Procedures Act (RESPA) required specific disclosure of important credit terms, including:
- Finance Charge: The cost of credit in dollars. It is important to keep in mind that some settlement charges will be classified as finances charges while others will not.
- Amount Finances: The amount that is being borrowed in the subject loan transactions, as well as the sale price of the credit sale. It does not refer to the loan’s face amount.
- Annual Percentage Rate: The “price tag” of the cost of the credit, which must be disclosed annually. The transaction will determine how this is calculated.
- Total of Payments: The total amount of periodic payments which have been made.
- Total Sales Price: The total amount of what is on credit, including the down payment made by the borrower and all of the payments which have been made.
- Compliance with TILA: Following the date of the disclosure, the lender is required to maintain record of compliance with TILA for a minimum of two years. The disclosure is required to be completely clear and must be kept on a document that the borrower is permitted to keep. Should the lender fail to comply or fail to disclosure, the “right to cancel” period may be extended for up to three years.
Has the Lender properly followed the California statutory foreclosure procedure?
“If not, you may have the right to sue the lender and prevent the foreclosure sale” – Joe
Information about California Civil Code Section 2924:
The vast majority of foreclosures in California are non-judicial and are contractually based on the “power of sale” clause. While a lender could file a lawsuit to foreclose on your property, the time and cost of litigation is a deterrent. The procedure for non-judicial foreclosure is detailed in the statute. Highlights of the statute are as follows:
- Notice of Default (NOD): The lender can begin non-judicial foreclosure by filing this notice at the county recorder’s office as soon as you are in breach of your contractual obligations. You must be given proper notice. There is no minimum number of payments that you have to miss. Lenders typically wait 2 months before filing the NOD.
- 90 day countdown: The default is curable during this period and no sale can occur. A bankruptcy during this period will typically freeze or “enjoin “the countdown. When the bankruptcy ends or the injunction is lifted, the countdown resumes.
- Notice of Trustee Sale (NTS): After the lapse of the 3 month period, the mortgage company or its agent can give notice of the sale date by filing this notice at the county recorder’s office. You are entitled to a minimum of 20 days certified mail notice before the sale and it must be posted at the property. You lose the right to cure the default five days before the sale; however lenders will often waive this provision if you obtain the ability to cure. A non-judicial foreclosure sale cannot occur in less than a total of 111 days from the filing of the NOD, and it usually takes longer.
- Trustee Deed: The high bidder at the auction receives a Trustee deed. If there are no bidders, the lender becomes the owner through a “credit bid”. Your personal obligation to pay money to the foreclosing lender is wiped out pursuant to the “one-action rule”, and the lender cannot sue you for a deficiency balance. The new owner takes title subject to any superior liens. Junior liens, like second mortgages and equity lines of credit are wiped out. In most cases, you are still personally liable to the junior lien holders for any unpaid balances and they can sue you. There may be income tax consequences as a result of the foreclosure. There is no right to redeem in California. You may be able to reverse a sale using bankruptcy or other law, under limited circumstances. The new owner can evict you soon after the property is sold.
Did the Lender or the mortgage broker engage any misrepresentations, deceptive practices, fraud or other wrongdoing that may constitute “predatory lending”?
“If so, you may have the right to sue the lender and the broker”- Joe
General information on predatory lending:
Predatory lending is defined as the use of deceptive and fraudulent tactics by companies during the obtaining of a loan. A common example of this would be a company who encourages a borrower to provide false information on a loan application – often utilizing an inflated income to allow the borrower to obtain a very large quantity of money. Unfortunately, in this scenario, the borrower is often unable to repay this amount. By utilizing this predatory lending technique, companies knowingly have a borrower obtain more money than they can ever hope to repay. Other common scenarios include working with appraisers to inflate the actual value of a property, charging exorbitant amounts in fees for services never performed, as well as using “bait and switch” to get a borrower into a loan created with the sole purpose of a default. These are all examples are considered predatory. If you feel as if you have been victimized by one of these tactics, it is extremely important that no time is wasted in contacting a knowledgeable lawyer; it can be extremely difficult to prove these cases and it is important that no time is wasted so that your attorney can begin investigation. In many cases, this will require extensive review process.