Reasons for California Foreclosure Postponement
Michael Hanks, CPA (Retired)In California, foreclosure sales may be postponed per CA Civil Code 2924 g (c) (2). The reasons for postponement are included in 2924 g (c) (1).
The primary postponement reasons include:
California Foreclosure Postponement - mutual agreement
The most common reason for postponement is because the lender agrees to postpone the sale. The lender may be responding to a homeowner requesting a little more time to sell the property, or the lender may be working with the homeowner on a forbearance or loan modification. Homeowners should be aware that when they enter a forbearance agreement, the foreclosure process continues; if they miss an agreed upon payment, the property can be sold on the next scheduled sale date with no further notice.
California Foreclosure Postponement - bankruptcy
When a homeowner files for bankruptcy protection, it puts an “automatic stay” on the foreclosure and on the collection of all other debts. The bankruptcy does not stop foreclosure, as many believe. Instead, it merely delays the sale of the property until the homeowner resolves the debt. In many cases, the lender will obtain approval from the bankruptcy court to continue the sale. This is called an “order granting motion for relief from stay.” This motion is granted because the debt is “secured” by the property, and the lender has the right to take the security (the property) if the owner does not make the payments as agreed. Bankruptcy is only an effective tool against foreclosure if the homeowner will have sufficient income to pay their home loan and make up past due amounts once the bankruptcy plan is completed.
California Foreclosure Postponement - Trustee's discretion
This is when the trustee makes a decision to postpone the sale. The most typical reason is that they are unable to reach the lender for sale instructions.
California Foreclosure Postponement - operation of law
This reason is fairly rare, but is used when a court orders the postponement of the sale. The most likely reasons are where there is a plausible allegation of fraud against the lender, or there are questions of material fact regarding the lender’s right to foreclose. This reason is gaining popularity with loan audits to determine compliance with federal TILA and RESPA laws.
Reader Comments (1)
I agree, most loan modifications are a waste of time 995 of all loan audit companies provide software audits that are "useless." If we provide our services ( forensic appraisal and document examination of the mortgage transaction) and there is nothing there to use against the bank, we always recommend a short sale.