A borrower who was a dependent adult took out a purchase-assist loan, then fell behind on mortgage payments. The lender contacted the borrower to discuss alternatives to foreclosure, then later recorded a notice of default (NOD) and completed foreclosure, causing the borrower to seek an alternative residence with advance notice limited to the foreclosure period. The borrower sought compensation from the lender claiming the lender committed dependent adult abuse since it failed to fully explore alternatives to foreclosure before foreclosing and forcing the borrower to find alternative housing. The lender claimed forcing the dependent adult to seek an alternate residence on a foreclosure was not abuse. A California appeals court held the borrower who was a dependent adult subjected to forced relocation on the foreclosure was not entitled to recover money from the lender since the lender did not wrongfully foreclose on the property. [Stebley v. Litton (2011) 202 CA4th 522]
Editor’s note – The borrower’s case against their lender relied on Civil Code section 2923.5, which requires a lender to contact the borrower to explore alternatives to foreclosure 30 days before filing a notice of default (NOD). This claim was not available in this case, since it does not require compensation after the foreclosure sale takes place. [For more information regarding this code, see the January 2010 first tuesday article, 30-day NOD moratorium applies only to owner-occupied, one-to-four residential units.]
