Billesbach v. Specialized Loan Servicing LLC
Facts: An owner defaults on the mortgage on their home. The mortgage holder initiates foreclosure proceedings without first discussing foreclosure alternatives. The owner files a complaint under the California Homeowner Bill of Rights (HBOR) alleging the mortgage holder violated the HBOR by failing to conduct a pre-foreclosure workout. The mortgage holder postpones the foreclosure sale, conducts a pre-foreclosure workout with the owner, and offers a trial loan modification plan with an expiration date for acceptance. The offer expires without acceptance and the mortgage holder proceeds to a foreclosure sale. Immediately prior to the scheduled foreclosure sale, the owner submits a counteroffer to the modification plan. The foreclosure proceeds and the property is sold to a third party.
Claim: The owner seeks compensation for the loss of their property to foreclosure, claiming the mortgage holder violated the HBOR by conducting the foreclosure sale while the loan modification application was pending since they submitted a counteroffer immediately before the scheduled foreclosure sale.
Counterclaim: The mortgage holder claims the owner failed to accept their offer for a trial modification and the owner’s untimely counter immediately prior to the foreclosure was ineffective since the trial period in which they could modify ended prior to the counteroffer and foreclosure sale.
Holding: A California appeals court holds the mortgage holder did not violate the HBOR by going forward with a foreclosure since the mortgage holder offered the owner a trial modification plan which the owner did not accept and the offer expired by its terms, after which the foreclosure sale was held. [Billesbach v. Specialized Loan Servicing LLC (2021) 63 CA5th 830]
Read Billesbach v. Specialized Loan Servicing LLC in full here.
Related Reading:
Mortgage Loan Brokering and Lending
Chapter 37: The nonjudicial foreclosure process
