Co-contributor Marc noticed a somewhat chilling story about borrowers who successfully won a fraudulent “dual tracking” case against OneWest Bank. (“Dual tracking” is the nomenclature for the practice by which some lenders simultaneously pursued foreclosure remedies while attempting loan modification negotiations with borrowers.)
According to an October 31, 2012 story in the San Francisco Chronicle, borrowers won a “dual tracking” dispute with OneWest in front of a jury in San Mateo County Superior Court, with the jury finding that the bank committed a wrongful foreclosure by dual tracking. However, borrowers only obtained $13,500 in damages for a remodeling project but would have to pony up the mortgage delinquency in order to get their home back. The real rub is that they received no attorney’s fees for this violation, with damages being very insufficient to cover borrowers’ legal expenses.
However, thank to the Homeowner Bill of Rights that will become effective on January 1, 2013, borrowers now have the ability to recoup attorney’s fees in “dual tracking” disputes unless the violation is promptly cured by the lender of residential properties foreclosing on more than 175 properties on an annual basis.
That takes us to the enhanced remedies, which are codified for many violations of the Homeowner Bill of Rights. However, unlike the limited remedy of staying the foreclosure found to govern the Perata Act predecessor provisions, the new legislative scheme codifies that material violations of its terms--including the failure to provide notice of foreclosure prevention alternatives to borrowers and failure to desist from “dual tracking”--gives rise to these additional remedies in addition to an injunction of a pending foreclosure sale until the enjoined entity has corrected or remedied the pertinent violations: (1) actual economic damages incurred by the borrower after completion of a trustee’s sale for material violations; (2) the greater of treble damages or $50,000 statutory damages if the material violations are judicially found to have been intentional, reckless, or the result of willful misconduct by the lender or mortgage servicer after completion of a trustee’s sale (new Civ. Code, §§ 2924.12(b), 2924.19(b), 2924.12(c), 2924.19(c)); and (c) an award of reasonable attorney’s fees and costs to the prevailing borrower if the borrower obtains injunctive relief or damages (new Civ. Code, §§ 2924.12(i), 2924.19(h).)
The Legislature expressly made this a unilateral fee-shifting clause in favor of the prevailing borrower and even provided the judiciary with how to determine if a borrower “prevailed.” Any violation of specified provisions of the Homeowner Bill of Rights are also deemed violations of the corporate, financial institution, or real estate licensing laws. (Id. §§ 2924.12(d), 2924.19(d)).
Nevertheless, keep in mind that these provisions only apply to first-priority lienholders on residential properties where the borrower is a natural person/trust deed trustor and where the lender forecloses on 175 or more residential properties on an annual basis.
If you want more detail on the Homeowner Bill of Rights, co-contributor Mike has written an article that can be accessed under the Lexis Nexis Real Estate Commentary online service or in a relatively recent edition of Matthew Bender’s California Real Estate Reporter--September or October 2012. (No plug, because he doesn’t get any royalties on this.)
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