Taniguchi v. Restoration Homes, Inc.
Facts: A property owner defaults on their mortgage and their mortgage holder offers to modify the mortgage. The modification reduces the owner’s monthly payments and interest rate and defers a portion of the principal balance owed until the mortgage matures. The owner defaults on the modified mortgage.
Claim: The mortgage holder seeks for the owner to pay all missed monthly payments, plus everything deferred under the mortgage modification, claiming they are owed these amounts since they were due under the terms of the original mortgage.
Counterclaim: The owner claims the mortgage holder may not require them to pay the deferred amounts in addition to the missed monthly payments since the owner has a right to reinstate their mortgage by paying only the amount currently in default.
Holding: A California appeals court holds the mortgage holder may not require the owner to pay deferred amounts since under California law the owner has a right to reinstate their mortgage as it was modified. [Taniguchi v. Restoration Homes, Inc. (April 30, 2019)_CA6th_]
Editor’s note — Reinstatement refers to a property owner or junior lienholder’s right to reinstate a mortgage and cure any default by paying the delinquent amounts due on the note and trust deed, plus foreclosure charges. [Calif. Civil Code §2924(c)]
Here, the court ruled only the monthly amounts the owner did not pay, based on the mortgage modification agreement, are required to reinstate the mortgage. Since the deferred amounts have not yet come due and are therefore not delinquent, the owner is not required to pay these to reinstate their mortgage.