Schmidt v. Citibank, N.A.
Facts: A homeowner obtains a mortgage from a lender then goes into default. The lender contacts the homeowner by mail and telephone numerous times, and they discuss the homeowner’s financial situation and options to avoid foreclosure, as required by the Homeowners’ Bill of Rights (HBOR). The homeowner does not cure the default. Greater than 30 days after contacting the homeowner, the lender records a notice of default (NOD) and notice of trustee’s sale (NOTS) against the property.
Claim: The homeowner seeks money losses and to prevent the sale of their home, claiming the lender violated the HBOR since the lender failed to initiate contact with them regarding their default before recording the NOD.
Counterclaim: The lender claims they complied with the HBOR since they discussed foreclosure alternatives with the homeowner before recording the NOD.
Holding: A California court of appeals holds the lender complied with the HBOR since they discussed foreclosure alternatives with the homeowner in compliance with the HBOR. [Schmidt v. Citibank, N.A. (November 7, 2018)_CA6th_]
Editor’s note—The HBOR requires the lender to discuss the homeowner’s financial situation and options to avoid foreclosure in person or by telephone. This requirement is satisfied when contact occurs and the homeowner’s options are discussed, regardless of who initiated contact.