I recently lost my California home to foreclosure, but I think the bank violated the Homeowner Bill of Rights when it foreclosed. Can I get my house back?
The California Homeowner Bill of Rights (HBOR) does not provide a way for you to get your home back if the bank violated HBOR during your foreclosure. You might be entitled to recover damages (a sum of money to compensate you for your losses) under this law though.
Also, depending on the facts of your particular situation, you may be able to set aside (undo) the foreclosure sale by making a different legal claim, such as wrongful foreclosure or breach of contract. However, this is only successful in rare circumstances.
Common HBOR Violations
The Homeowner Bill of Rights (HBOR) is a set of California laws designed to protect homeowners in the foreclosure process. Under HBOR, the following activities (among others) are illegal:
- dual tracking (foreclosing on a homeowner while a loan modification application is pending)
- not providing a single point of contact (an individual or team of personnel) for the borrower to work with during the loan modification process, and
- robo signing. (Robo signing occurs when an employee of the bank or loan servicer signs foreclosure documents without having any knowledge about whether the information contained in the documents is correct.) (Learn more about the California’s Homeowner Bill of Rights and how your lender or servicer may violate it.)
Remedies if Your Lender or Servicer Violates HBOR
Depending on whether or not the foreclosure sale has already occurred, if your bank or mortgage servicer (the company you make your payments to) violates HBOR, you can sue to:
- stop the foreclosure sale, or
- receive damages.
If the foreclosure sale has already taken place, however, you cannot sue to get the house back under HBOR.
Stopping the Sale
In cases where the foreclosure sale has not yet occurred, you can ask the court for an order stopping the foreclosure (called an injunction). Unfortunately, this may only postpone the sale until the bank starts acting in compliance with HBOR’s requirements.
Suing for Damages
If the foreclosure sale has already taken place, you can sue the bank to recover your actual damages (that is, your monetary losses caused by the bank’s violation of HBOR). You might get triple damages or $50,000 (whichever is greater) if a court finds that the violation was intentional, reckless, or resulted from willful misconduct, plus attorneys' fees and costs.
Legal Claims That Could Help You Get Your House Back
Although HBOR won't let you get your home back, you might be able to reclaim your home in rare circumstances by making a legal claim such as wrongful foreclosure or breach of contract, depending on the facts of your situation.
Wrongful Foreclosure Claims
In California, the following situations (among others) could provide the basis for a wrongful foreclosure claim:
- The foreclosing party did not have authority to foreclose. Under California law, only certain parties (such as the owner of the loan) can start a foreclosure. If some other party started the foreclosure, you can make a wrongful foreclosure claim.
- The foreclosing party made a mistake in the foreclosure documentation. In California, a third-party called a “trustee” handles nonjudicial foreclosures. The trustee is designated in the deed of trust or in a document called a “Substitution of Trustee” (SOT), which must be recorded in the land records. If the SOT is not recorded or is not completed properly (for example, if the person who signed the SOT lacked authority or robo signed the document), any actions the trustee takes, such as conducting a foreclosure sale, are void. (Learn more about general foreclosure laws and procedures in California.)
- The servicer did not follow FHA rules. You may be able to challenge the foreclosure if you have an FHA loan and the servicer did not meet FHA’s strict loss mitigation requirements. (“Loss mitigation” in this context means finding a way to avoid foreclosure.) For example, FHA guidelines require the servicer to make reasonable efforts to have a face-to-face meeting with a borrower who falls behind in payments. (Learn more about FHA loans in Nolo’s article What is the difference between a conventional, FHA, and VA loan?)
Breach of Contract Claims
In some situations, you may be able to bring a breach of contract claim to set aside the foreclosure sale. For example, if your loan servicer foreclosed on your home even though you were making payments pursuant to a written loan modification agreement, you might be able to invalidate the sale.
How to Make Your Claim
You can raise a claim of wrongful foreclosure or breach of contract in the unlawful detainer (eviction) action after the foreclosure or by filing your own lawsuit.
When to Hire an Attorney
Claims for wrongful foreclosure and breach of contract represent just two of the ways you could try to set aside a foreclosure sale. There are others. If you have lost your home to foreclosure and think that the bank violated the law in the process, you should speak to a qualified attorney who can advise you about what to do in your circumstances. Keep in mind that very few borrowers are able to get their home back after a foreclosure.
To learn more about how to get the court to set aside (invalidate) a foreclosure sale, see Nolo’s article Setting Aside a Foreclosure Sale.