Facts: A homeowner purchased a property with mortgage funds provided by a lender. The owner went into default while deployed overseas on active military duty. The lender filed a notice of default (NOD), adding fees associated with the foreclosure to the owner’s loan balance. The lender later rescinded the NOD but did not forgive the foreclosure fees. The mortgage was transferred to a successor lender who attempted to recover the foreclosure fees from the owner.
Claim: The owner sought to avoid paying the foreclosure fees, claiming the successor lender’s attempt to recover the fees violated the Servicemembers Civil Relief Act (SCRA) since SCRA protects all active duty servicemembers from foreclosure and related fees.
Counter claim: The successor lender claimed the owner was liable for the fees and not protected under SCRA since the act only covers foreclosure — the seizure and sale of physical property — and does not include foreclosure-related fees.
Holding: A California court of appeals held the lender was not permitted to collect foreclosure fees from the owner since SCRA protects owners on active duty from foreclosure while deployed, which includes protection from related foreclosure fees. [Brewster v. Sun Trust Mortgage, Inc. (February 10 2014) _CA4th_]
Editor’s note — Although SCRA does not provide a specific definition of foreclosure, the court defined foreclosure as a process encompassing more than just the single physical act of foreclosure, including the collection of fees associated with foreclosure. The act of foreclosure, and the fees associated with it, exist in tandem and cannot be separated.
