Earline Williams v. 21st Mortgage Corporation

Facts: A homeowner fell behind on their mortgage payments and filed a petition for Chapter 13 bankruptcy. The owner paid the bankruptcy trustee monies sufficient to cover the pre-petition delinquent mortgage payments but missed monthly mortgage payments after filing. The homeowner tendered the post-petition delinquent mortgage payments to reinstate the mortgage. The lender rejected the payment and demanded the reinstatement cost and post-bankruptcy petition amount held by the bankruptcy trustee. The owner was unable to pay, and the lender foreclosed.

Claim: The owner sought money losses, claiming the lender improperly foreclosed since it demanded the pre-bankruptcy petition amount held by the bankruptcy trustee to reinstate the mortgage.

Counterclaim: The lender claims it is entitled to foreclosure since the full bankruptcy petition amount along with the mortgage payments sufficient to reinstate the mortgage were not paid.

Holding: A California appeals court held the owner was entitled to money losses since the lender demanded the cost of reinstatement and the pre-petition mortgage payments held by the bankruptcy trustee in violation of bankruptcy protections. [Earline Williams v. 21st Mortgage Corporation (January 27, 2020)­_CA6th_]

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