Judicial and Non-Judicial Foreclosures
If a property buyer defaults on mortgage or deed of trust payments, the lender generally has the right to foreclose on the property. While the most basic consideration is whether the borrower made timely payments to the lender or actually defaulted as specified in the contract, there are another of other issues that may provide a defense to a foreclosure or entitle the borrower to damages.
MERS Issues: MERs stands for Mortgage Electronic Registration System, Inc., and is designated as the mortgagee in most real estate transactions to allow banks to easily buy and sell mortgages. In a foreclosure action, such a designation may mean that the lender doesn’t have legal standing to file for foreclosure.
580B Issues: Under California law, if a foreclosure sale does not cover the remaining debt, the remaining debt must be forgiven and the lender cannot take further collection action.
One Action issues: California’s One Action Rule prohibits lenders from taking multiple actions to recover on a defaulted loan at the same time. They cannot, for example, foreclose both judicially and nonjudicially.
California Homeowners’ Bill of Rights: Home buyers are granted a wide range of protections meant to ensure transparency and fairness both in the buying process and in a later foreclosure process. Violations may result in monetary damages being awarded to the buyer.