California Foreclosure Attorney / Huntington Beach
California Civil Code section 2923.5 (“2923.5” or the “Statute”) requires lenders to contact the borrower “in person or by telephone” to “assess the borrower’s financial situation and explore options for the borrower to avoid foreclosure,” 30 days before recording a Notice of Default against a property.
Olson Law Firm has successfully stopped foreclosures and obtained injunctions because the banks violated Civil Code Section 2923.5. We get many questions about the foreclosure process and the applicability of section 2923.5. Below are some of the common questions our foreclosure attorney gets:
QUESTIONS ABOUT CIVIL CODE SECTION 2923.5 IN CALIFORNIA
1. Can an individual sue to enforce California Civil Code section 2923.5?
Yes. This seems obvious; however, there are some California foreclosure statutes that individuals cannot enforce.
2. Must a borrower tender the full amount of the mortgage indebtedness due as a prerequisite to bringing an action under section 2923.5?
No; although curing the default by paying all of the alleged arrears and costs is a method to reinstate a loan and get out of foreclosure, such is not a requirement for 2923.5 to apply.
3. Is section 2923.5 preempted by federal law?
No — but, the remedy for noncompliance is a postponement of the foreclosure sale, nothing more.
4. What is the extent of a private right of action under section 2923.5?
The right of action is limited to obtaining a postponement of an impending foreclosure to permit the lender to comply with the statute.
5. Must the declaration required of the lender by section 2923.5, subdivision (b) be under penalty of perjury?
6. Does a declaration in a notice of default that tracks the language of section 2923.5, subdivision (b) comply with the statute, even though such language does not on its face delineate precisely which one of the three categories set forth in the declaration applies to the particular case at hand?
Yes. There is no indication that the Legislature wanted to saddle lenders with the need to “custom draft” the statement required by the statute in notices of default. The Court of Appeal let this issue slip by in favor of the lenders whose only requirement is to state that they contacted the borrower, has tried with due diligence to contact the borrower as required by this section, or that no contact was required pursuant to subdivision (h).” These are three very different scenarios that may have occurred and since the policy of the Statute is designed to make the lenders accountable and attempt to deal with the borrowers, I believe the Court should have mandated that the lenders state how they complied with the statute either by:
a. Actually contacting the borrower;
b. Actually trying with due diligence to contact the borrower; or
c. State that no contact was required.
Without requiring the lenders to take the extra step, the issue of Robo-Signers has emerged and is proving to be extremely problematic and is creating more litigation in this area.
7. If a lender did not comply with section 2923.5 and a foreclosure sale has already been held, does that noncompliance affect the title to the foreclosed property obtained by the families or investors who may have bought the property at the foreclosure sale?
No. The Legislature did nothing to affect the rule regarding foreclosure sales as final. This is important because if the issue of noncompliance with 2923.5 is not raised before the foreclosure sale and the property is sold to a bona fide purchaser for value (someone without knowledge of the defects in the foreclosure process and who paid money for it); there is a significant chance that the homeowner will have waived this defect and lose the property.
8. Can section 2923.5 be enforced in a class action in this case?
No. The operation of section 2923.5 is highly fact-specific, and the details as to what might, or might not, constitute compliance can readily vary from lender to lender and borrower to borrower.
Civil Code 2923.5 Attorney / Huntington Beach Foreclosure Lawyer
To summarize, Civil Code section 2923.5 is significant because it creates a private right of action if it is not complied with by the lenders. Private individuals may sue and force the lenders to comply with the statute, and not be required to pay the arrears before enforcement is mandated. If a lender does not comply with the statute, then the lender can be forced to start the foreclosure process at the beginning once it finally complies with 2923.5. Finally, if a homeowner does not bring up the issue regarding compliance before a foreclosure sale and the property is sold to a bona fide purchaser, then the homeowner may have waived the right to assert this defect in the foreclosure process as a reason to reverse the foreclosure sale.
Contact Our Foreclosure Defense Attorney If You Believe Your Lender Is Not Following The Law.
If you believe that your lender has violated California Civil Code section 2923.5, contact out lawyer to discuss your legal options. It is much easier to save your home from foreclosure if you act before the sale takes place. Additionally, you will not be able to save your home after a foreclosure sale using Civil Code section 2923.5, so it is important to contact us as soon as you believe a foreclosure violation has occurred. Contact us online or call me at 714-847-2500 to schedule an appointment to save your home in California.
The full text of Civil Code section 2923.5 can be read here.