By Glen C. Hansen

In 2008, the California Legislature enacted Civil Code section 2923.5. That statute requires, before a notice of default may be filed, that a lender contact the borrower in person or by telephone to “assess” the borrower’s financial situation and to “explore” options for the borrower to prevent foreclosure.  In Mabry v. Superior Court (June 2, 2010) 185 Cal.App.4th 208, the Court of Appeal for the Fourth Appellate District addressed a case where plaintiff borrowers brought an action that requested a restraining order to prevent a foreclosure sale based on the lender’s alleged failure to comply with section 2923.5. The trial court denied plaintiffs’ request on the grounds of no private right of enforcement and federal preemption. The Court of Appeal reversed, and disagreeing with the trial court on both grounds.Continue Reading Borrowers May Sue to Postpone a Foreclosure if the Lender Does Not First Discuss Options with the Borrower to Prevent Foreclosure

By Glen Hansen

In Hashalom v. City of Santa Monica (No. B212733, November 22, 2010) 2010 Cal.App. LEXIS 1990, the Court of Appeal for the Second Appellate District held that an apartment complex did not fall within a statutory exemption from historic preservation provided by Government Code section 37361, subdivision (c), because the property had always been a commercial enterprise, both when the current owner purchased it and when the same owner later sought the exemption.Continue Reading To be Exempt from Landmark Designation, a Property Must be Related to the Owner’s Religious Mission Before Application for the Exemption

By Glen C. Hansen

In Vuki v. Superior Court (October 29, 2010) 189 Cal.App.4th 791, Lucy and Manatu Vuki filed an action against their mortgagee, HSBC Bank USA, initially seeking a temporary restraining order that would stay HSBC’s eviction of the Vukis after the Vukis lost their home to foreclosure. The Vukis alleged, among other things, that HSBC violated the requirements for a “comprehensive loan modification program” that are provided in Civil Code sections 2923.52 and 2923.53 (enacted in 2009). The trial court denied the application for a temporary restraining order and the Vukis filed a writ proceeding with the Court of Appeal for the Fourth Appellate District. The Court denied that writ petition on the grounds that neither section 2923.52 nor section 2923.53 provides any private right of action.Continue Reading Mortgagors May Not Privately Enforce The Requirement Imposed On Lenders To Have A Comprehensive Loan Modification Program

California Court of Appeal for the First Appellate District held that home loan borrowers could not state a cause of action for fraudulent misrepresentation or concealment against a lender, because a borrower is not entitled to rely upon a lender’s knowingly false determination that the borrower is qualified for a loan in order to decide if the borrower could afford the loan.
Continue Reading A Lenders’ Loan Approval Is Not An Implied Promise That The Borrower Can Afford The Loan

By Glen C. Hansen

In Holmes v. Summer (2010) 188 Cal.App.4th 1510, the Court of Appeal for the Fourth Appellate District held that when a real estate agent or broker for a seller is aware that the amount of existing monetary liens and encumbrances exceeds the sales price of a residential property, so as to require either the cooperation of the lender in a short sale or the ability of the seller to put a substantial amount of cash into the escrow in order to obtain the release of the monetary liens and encumbrances affecting title, the agent or broker has a duty to disclose this state of affairs to the buyer, so that the buyer can inquire further and evaluate whether to risk entering into a transaction with a substantial risk of failure.
Continue Reading Seller’s Broker Has Duty to Inform Buyer That Property is so Over-Encumbered That Escrow Will Likely Not Close