Surplus Funds Recovery
Wrongful Foreclosure Lawyer for Los Angeles County and Orange County Homeowners
The remedy for a foreclosure done wrong depends on the calendar: an injunction while a sale can still be stopped, damages once it has happened, and limitation periods that vary by theory. We tell you which applies to your file.
- Servicer contact required at least 30 days before a Notice of Default (Civ. Code §2923.5)
- Dual tracking is barred while a modification application is pending (Civ. Code §2923.6)
- Injunctions stop a pending sale; after the sale, damages up to treble (Civ. Code §2924.12)
- Limitation periods differ by theory, two years to four; call early
Wrongful foreclosure is the claim a homeowner brings when the servicer or the trustee took a home without following the rules California attaches to the process. The Homeowner Bill of Rights governs what must happen before a Notice of Default, the Civil Code governs how a sale must be noticed and conducted, and case law governs who may foreclose at all. Fred Yadegar reviews foreclosure files for homeowners in Los Angeles County and Orange County and pairs the claim with the surplus and possession questions that follow a sale.
If the sale date is still ahead of you
While there is a sale to stop, the statute offers an injunction. Under Civil Code §2924.12 a borrower may sue to enjoin a trustee’s sale until a material violation of the Homeowner Bill of Rights is corrected. The servicer must make contact, in person or by phone, to review the borrower’s finances and discuss options, or make diligent efforts to do so, at least 30 days ahead of recording the Notice of Default (§2923.5). Once a completed first-lien modification application is in, the servicer is barred from recording a Notice of Default or Notice of Sale, and from holding the sale, for as long as the application is under review and until the appeal period, if any, has expired (§2923.6). A borrower who requests a foreclosure prevention alternative is entitled to a single point of contact who knows the file (§2923.7). Every declaration and notice must be accurate, and the right to foreclose must rest on competent and reliable evidence (§2924.17). The protections reach most first-lien mortgages on owner-occupied properties of one to four units (§2924.15).
A temporary restraining order followed by a preliminary injunction holds the sale in place, and the pause often produces the modification review that should have happened.
If the sale has already happened
After the sale the same statute shifts to money. A borrower may recover actual economic damages caused by a material violation, and where the violation was intentional, reckless, or willful, the award rises to treble damages or $50,000, whichever is greater; a borrower who prevails also recovers attorney’s fees (§2924.12).
Recovering the house itself is the harder path. The general rule requires tender of the full debt before a voidable sale is set aside. The exceptions: a sale that is void rather than voidable, a challenge to the validity of the debt itself, an offset the borrower holds against the lender, or circumstances in which tender would be inequitable. Once the purchaser has resold to a buyer who gave fair value with no notice of the problem, unwinding the sale becomes far harder, and the claim proceeds as one for damages.
Call now: A Notice of Trustee’s Sale that appears while a completed modification application sits under review is the clearest sign of dual tracking. An injunction is available only while there is still a sale to enjoin, so call ahead of the sale date, submission confirmations in hand.
Whether the party foreclosing had the right to
Two other categories of error do not depend on the Homeowner Bill of Rights. The first is the notice sequence itself. The Notice of Default must be recorded and mailed; three months must then pass; and the Notice of Sale must be recorded, posted, mailed, and published no fewer than 20 days ahead of the auction (§2924, §2924f). A notice quoting the wrong figure, mailed to the wrong address, or recorded ahead of schedule is defective. So is a sale held during a forbearance or an approved modification, or after a payment was refused or never applied.
The second is authority. Loans are sold and assigned repeatedly, and the paperwork does not always keep up: assignments signed by entities that no longer existed, missing endorsements, substitutions of trustee recorded by the wrong party. Yvanova v. New Century Mortgage, decided by the California Supreme Court in 2016, allows a borrower to sue after a completed sale where the assignment under which the foreclosing party claimed authority was void, as opposed to merely voidable. How the recorded chain is read is explained on our trustee sale page.
How much time you have
There is no single limitation period for wrongful foreclosure. Breach of a written loan contract carries a four-year period (Code Civ. Proc. §337). Claims based on a statutory violation or on fraud generally carry three (§338). Some theories carry two. Which period applies, and when it began to run, is decided by the facts of each file, so we treat the second anniversary of the sale as the point after which options begin to close, and we ask homeowners to call well before it.
The two other cases running at the same time
A sale that produced a surplus gives the former owner a claim under Civil Code §2924j regardless of whether the sale was proper, but accepting the surplus can be characterized as accepting the sale. We review both before a claim is signed or a check is cashed; the surplus claim procedure has its own page.
If the buyer has filed an unlawful detainer, its burden there is to show that its title came from a sale that complied with the foreclosure statute (Code Civ. Proc. §1161a), which allows defects in the sale to be raised in that case within limits. The eviction side is covered on unlawful detainer, and everything else in the first 90 days on its own page.
Assemble these before you call
- Every notice you received, including the Notice of Default, the Notice of Sale, postponement letters, and the envelopes with their postmarks
- Your modification file: the application, each submission confirmation, and each denial, with dates
- A dated log of each conversation with the servicer, with the names of the people you spoke to and what they said
- Every recorded assignment of your deed of trust and every substitution of trustee
- The sale date, if one is set; if it is, call today rather than this week
Why this office
Fred Yadegar has been licensed in California since 2006, State Bar #244184, and reviews foreclosure files for homeowners throughout Los Angeles County and Orange County. These cases turn on documents: the notice recorded ahead of schedule, the application the servicer wrongly called incomplete. We read the file, tell you plainly whether the rules were broken, and fit the remedy to the questions of money and possession that arrive with it. Tell us what happened and we will explain your options and the cost before you commit to anything.
Written and reviewed by Fred Yadegar, California attorney, State Bar #244184, licensed since 2006.
Questions about wrongful foreclosure
It may be. Once a completed first-lien modification application is in, Civil Code §2923.6 stops the servicer from recording a Notice of Sale or holding the sale for as long as the application is under review and until any appeal period expires. Whether your application was complete, and whether the appeal period has run out, decides it. Call today with your submission confirmations.
Generally not. The core protections reach first-lien mortgages on owner-occupied properties of one to four units (Civ. Code §2924.15). A rental may still have claims under the notice statutes and general law, so the file is worth reviewing either way.
Actual economic damages caused by a material violation, and where the violation was intentional, reckless, or willful, treble damages or $50,000, whichever is greater, plus attorney's fees to a borrower who prevails (Civ. Code §2924.12). Getting the house back is possible only in narrow circumstances.
The declaration recorded with the Notice of Default has to be accurate and rest on competent and reliable evidence (Civ. Code §2924.17), and §2923.5 requires actual contact or documented diligent attempts. Your phone records and the servicer's notes are compared. A false declaration is itself a violation.
The general rule requires tender of the full debt before a voidable sale is set aside. The exceptions are a sale that is void rather than voidable, a challenge to the validity of the debt itself, an offset you hold against the lender, or circumstances in which tender would be inequitable. Which exception fits, if any, is decided on your facts.
Not automatically. The buyer's burden in the eviction case is to show that its title came from a sale that complied with the foreclosure statute (Code Civ. Proc. §1161a), so defects can be raised there within limits, and a pending case can affect how the eviction proceeds. The two matters are handled together.
Was a required step skipped before your home was sold?
Send the notices and the modification paperwork. We will identify what the servicer had to do and whether it did.
Contingency fee applies to injury and surplus-funds matters. Costs may be advanced and repaid from any recovery; ask us how it works in your case.