We have been getting a slew of calls from Arizona and California homeowners calling us after their house has been sold at a foreclosure sale.  Here are a sample of the kinds of things we are CONSTANTLY hearing:

1. “Can you help me, they just sold my house without warning, I got no notice of the sale…..?”
   
2. “Can I sue my lender, I was in a trial plan modification agreement (on my second or third payment, etc.) and my lender just foreclosed on me.  What’s the deal, I thought I was approved by HAMP….?”
   
3. “My house was sold but the lender did not follow the foreclosure laws….can you sue those &^!**#* to get my house back?”
   
4. “The lender has posted a notice of sale on my door, but I think they are trying to work out a modification with us so I am not going to do anything for the meantime hoping they will give me a modification that allows me to keep my house.”
   
5. “Truth in Lending (“TILA Audits”), what’s that?  My loan was 2.5 years ago, and it was a refinance transaction but I will not deal with that issue right now, I have a “law center” working on my case, they are in control of everything.”
   
6. “I am just going to file for Chapter 7 Bankruptcy, that will save my house from foreclosure right?”
   
7. “I just made my final trial plan modification payment so that will stop the foreclosure sale right?”
   
8. “the lady on the phone at the lenders office told me to stop making payments and they will work out the loan modification for me, that should do the trick right?”
   
9. “my loan modification file has been submitted to a negotiator for review, therefore, I do not have to worry about them foreclosing on me.”
   
10. “the loan servicer said they were willing to work with me to save my home, and that after submitting financial information over the phone they said I qualify, that puts me in a good and safe position right?”

This is just a sample of the kinds of things we hear from callers to our law firm.  We are a bit surprised of the gullibility and naieviety of some of the people who think the banks are their friends, and their to help them share in the bailout money.  This couldn’t be further from the truth.  In our experience, yes, there are loan modifications getting done, but NO, everyone does not qualify, and everyone will not be helped by HAMP, HAFA and similar programs.

THE “LENDER LENDER PLEASE DONT MAKE ME TENDER” PROBLEM

Here is the crux of the “having trust and faith in your banks, lenders, and loan servicers” of the problem, if a lender forecloses on your property, whether you were in the middle of HAMP review, HAFA review, etc., and regardless of whether the foreclosure laws in Arizona or California were followed, if your house is foreclosed, the first thing a lender will say when we file a lawsuit is “your client cannot tender the full balance of the loan so therefore you cannot challenge the foreclosure sale process.”

What?  Say that again?  OK, If your house is sold, and you want to try to set aside the sale challenging a wrongful foreclosure, and if you file a civil lawsuit, the lenders will cite several cases as precedent that you cannot challenge the unlawful acts of a lender, loan servicer, trustee, MERS (whatever the case may be) in an attempt to set aside the foreclosure sale UNLESS YOU CAN ALLEGE THAT YOU ARE READY, WILLING AND ABLE TO TENDER THE FULL BALANCE OF THE MORTGAGE YOU OWE.

Yes, I know that sounds a little strange, unfair, and inequitable.  They will argue in their answer, motion for demurrer, motion in opposition to preliminary injunction etc., that you have no right to “ask for equity” (i.e. to quiet title or set aside a trustee sale) unless you “do equity.”

Does this hold up, well folks, it is the law, and judges are supposed to follow the law.  Of course, there is at least one challenge, there is a 100 year old rule that says the Courts do not have to require a full tender “where it would be unjust to require such.”  So, I suppose there is always hope, but perhaps the same chances of winning a lottery, who knows.

At any rate, the moral of this story is this:  THINK CAREFULLY BEFORE YOU TRUST A SINGLE WORD YOUR LENDER OR LOAN SERVICER SAYS.  THEM TELLING YOU THAT YOU ARE ELIGIBLE FOR HAMP OR HAFA (SHORT SALES) OR A LOAN MOD, OR THEM GIVING YOU A TRIAL PLAN, ETC., THIS DOES NOT MEAN THEY WILL NOT SECRETLY AND DECEPTIVELY SELL YOUR HOME UNDER A CLOUD OF DECEPTION AND THEN HAVE THEIR LAWYERS TELL THE JUDGE “YOUR HONOR, THEY CANNOT CHALLENGE MY CLIENT’S NONSENSE AND ILLEGAL ACTIVITIES UNDER THE FORECLOSURE LAWS BECAUSE THE BORROWER CANNOT TENDER.”

Just giving you a heads up.  The minute you are facing foreclosure (i.e. you get a notice to accelerate or a notice of default, do yourself a favor, seek out the services of a foreclosure attorney.  Have your loan reviewed for a TILA violation that may raise an extended three year rescission right, and/or find other predatory lending violations that may be compensible/actionable in a court of law.  The lenders and loan servicers fear very little in this process, and they have lawyers working on their side telling them how they can use the law in their favor, avoid compliance with foreclosure laws, remove cases to federal court etc.  You need someone on your side to see if you have any legal rights, see if you can rescind your loan, see if you can obtain an injunction to stop foreclosure where the lenders refuse to play by the rules, file bankruptcy where applicable, or pursue a short sale that may save your credit from the harmful effects of foreclosure, etc.  In the war on foreclosure, you have to be decidedly proactive, rather than reactive.  The house you save may be your own.

Steve Vondran, Esq. is an attorney licensed to practice law in California and Arizona.  He is currently assisting homeowners in foreclosure defense cases, bankruptcy chapter 7, predatory lending litigation, TILA audits, Short sales, Deed-in-lieu of foreclosure, injunctions, lis pendens, and deficiency judgment issues.

He can be reached at (877) 276-5084 or emailed at steve@vondranlaw.com