Mortgage Law in California

California Debt Relief Attorney

A lawyer may be able to defend you against the foreclosure of your home. At the Law Office of J. Arthur Roberts and Associates, we rely on a variety of legal theories to defend against home foreclosure, some of which are detailed below.  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 you by rescinding your original loan, suing the lender for damages or negotiating a better loan modification.

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 California Attorney Joseph Arthur “Joe” Roberts

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” -Joe

Information about the Truth in Lending Act (TILA) (15 U.S.C. §§ 1601-1667f, as amended):

TILA was enacted by Congress in 1968 as a part of the Consumer Protection Act. This law is designed to protect consumers in credit transactions, requiring clear disclosure of key terms of the lending arrangement and of all costs.  The Truth in Lending Act is intended to give consumers a price tag so that people can compare the “cost of credit”.  The law is intended and designed to reduce confusion among borrowers resulting from the different methods of computing interest, as well as to prevent fraud, deception and unfair business practices.

Regulation Z of the Real Estate Settlement Procedures Act (RESPA) required specific disclosure of important credit terms, including:

1. Finance Charge:  This important amount represents the cost of credit in dollars.  Some settlement charges are considered finance charges and some are not. 
2. Amount Financed: The amount being borrowed in the subject loan transaction, or the sale price of the credit sale.  This amount is not necessarily the face amount of the loan.
3. Annual Percentage Rate: This percentage is the “price tag” or measure of the cost of the credit, disclosed on a yearly basis.
4. Total of Payments: The total sum of the periodic payments by the borrower.
5. Total Sales Price: The total cost of the purchase on credit, including the down payment and periodic payments. 
6. The lender must maintain evidence of compliance with TILA for at least two years after the date of disclosure. Disclosures must be clear and conspicuous.  Disclosures must appear on a document that the borrowers may keep.  (A lender’s failure to comply with disclosure requirements or to properly disclose the original right to rescind a refinance loan may extend the “right to cancel” period for up to 3 years.) 

Contact our office and have your original loan and settlement papers looked over by an attorney at our firm.

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.

Contact our office for a consultation by an attorney at our firm.

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:

A common form of predatory lending occurs when a company encourages borrowers to falsify information on their loan application.  The use of fake and inflated income is used to obtain very high amounts of money that the borrower is unable to repay. Predatory lending also covers mortgage brokers and lenders who allow folks to borrow extremely high amounts when they know the borrowers can’t afford to repay or who conspire with appraisers to overinflate the value of properties.  Predatory lenders also commonly charge high fees for services that are not performed or use “bait and switch” tactics to put people into loans that set them up for inevitable default.  Most negative amortization loans, almost by definition, are predatory.  Proving these types of cases require a lot of factual investigation, document review and depositions. 

Contact our office and have your original loan and settlement papers looked over by an attorney at our firm.