Surplus Funds Recovery
Wrongful Foreclosure Attorney for Los Angeles and Orange County
If the servicer skipped required steps, sold while your modification was pending, or never had the right to foreclose, the law gives you remedies before and after the sale. Deadlines vary by theory, so call early.
- Servicer must contact you at least 30 days before a Notice of Default (Civ. Code §2923.5)
- No dual tracking while a complete modification application is pending (§2923.6)
- Injunction before the sale; damages, up to treble, after it (Civ. Code §2924.12)
- Deadlines run from two to four years depending on the claim; call early
A foreclosure can be final and still be wrong. California’s Homeowner Bill of Rights lays out what a servicer must do before it takes a home, and the Civil Code lays out how a trustee’s sale must be noticed and run. When those rules are broken, the homeowner has remedies: stopping the sale, recovering damages after it, and in narrow cases undoing it. Fred Yadegar reviews foreclosures for homeowners across Los Angeles County and Orange County, and coordinates the claim with the surplus claim and the eviction case.
What the Homeowner Bill of Rights requires
The Homeowner Bill of Rights applies to most first mortgages on owner-occupied homes of one to four units (Civ. Code §2924.15). Its core duties:
- Contact before default. The servicer must contact you in person or by phone to assess your finances and explore alternatives, or diligently try to, at least 30 days before recording a Notice of Default (§2923.5).
- No dual tracking. Once you submit a complete application for a first-lien loan modification, the servicer may not record a Notice of Default or a Notice of Sale, or conduct a sale, while the application is pending and until any appeal period has run (§2923.6).
- A single point of contact. Once you ask for a foreclosure prevention alternative, you get one person or team who knows your file and can act on it (§2923.7).
- Accurate paperwork. Declarations and notices must be accurate and supported by competent and reliable evidence of the right to foreclose (§2924.17).
The teeth are in §2924.12. Before the sale, a borrower can sue for an injunction to stop it until the violation is corrected. After the sale, the borrower can recover actual economic damages, and if the violation was intentional, reckless, or the result of willful misconduct, the court can award the greater of treble damages or $50,000. A prevailing borrower can recover attorney’s fees.
Defective notices, servicer errors, and who had the right to foreclose
The sale itself has rules too. The Notice of Default must be recorded and mailed, at least three months must pass, and the Notice of Sale must be recorded, posted, mailed, and published at least 20 days before the auction (§2924, §2924f). A notice with the wrong amount, sent to the wrong address, or recorded too early is a defect. So is a sale held during a signed forbearance or approved modification, a payment received and never applied, or a reinstatement payment that was refused.
Then there is who was foreclosing. Loans are sold and assigned many times, and robo-signed assignments, missing endorsements, and entities that no longer existed when they “signed” are real problems. The California Supreme Court held in Yvanova v. New Century Mortgage (2016) that a borrower can sue for wrongful foreclosure after a completed sale when the assignment that gave the foreclosing party its authority was void, not merely voidable. Our trustee sale page explains how to read the recorded documents.
Call now: If a Notice of Trustee’s Sale was recorded while your complete modification application is pending, the servicer may be dual tracking you right now. Call before the sale date with your submission confirmation in hand. An injunction is only available while there is still a sale to stop.
Remedies before and after the sale
Before the sale, the goal is time and correction. A temporary restraining order and preliminary injunction under §2924.12 can hold the sale while the servicer fixes the violation, and a completed modification review or a negotiated postponement often follows.
After the sale, the choices narrow. Damages are the usual remedy: lost equity, out-of-pocket costs, and statutory damages where the statute provides them. Setting aside the sale is possible but hard. Courts generally require the borrower to tender the full amount owed before undoing a voidable sale, with exceptions when the sale is void, when the borrower attacks the validity of the debt itself, when the borrower holds an offset against the lender, or when tender would be inequitable. If the property has been resold to a buyer who paid fair value without notice of the defect, undoing the sale becomes far harder, and the case usually proceeds for money.
Deadlines vary by theory, so call early
No single statute of limitations applies. A claim for breach of a written loan agreement carries four years (Code Civ. Proc. §337). A claim based on a statutory violation or fraud generally carries three (§338). Negligence claims carry two (§339). Which clock applies, and when it started, depends on the theory and the facts. Treat the two-year mark from the sale as the point where your options start disappearing, and call well before it.
How this fits with your surplus claim and the eviction case
If the sale produced a surplus, you have a claim to that money under Civil Code §2924j whether or not the sale was proper, but taking the surplus can be argued as accepting the sale. We coordinate the two so one does not undercut the other; the claim process is on our overage and surplus funds recovery page.
If the buyer has filed an unlawful detainer to remove you, the buyer must prove it acquired title at a sale conducted in compliance with the statute (Code Civ. Proc. §1161a). Defects in the sale can be raised there, within limits. See unlawful detainer for the eviction side and post foreclosure assistance for the rest of the 90 days after the sale.
What to do right now
- Gather every notice you received: Notice of Default, Notice of Sale, any postponement letters, and the envelopes they came in
- Print your modification file: the application, every submission confirmation, and every denial, with dates
- Write a timeline of every call with the servicer, including names, dates, and what was promised
- Pull the recorded documents, including any assignments of the deed of trust and substitutions of trustee
- If a sale date is set, call today; if the sale has happened, call this week
Why call Fred
Wrongful foreclosure cases are won on paper: the notice that came too early, the application that was complete when the servicer said it was not. Fred Yadegar reads the file and tells you plainly whether the servicer broke the rules and how the remedy fits with the money and possession questions you are also facing. He serves homeowners across Los Angeles County and Orange County. Tell us what happened and we’ll explain your options and costs before you commit to anything.
Questions about wrongful foreclosure
A sale conducted in violation of the Homeowner Bill of Rights or the notice statutes, a sale by a party that lacked the right to foreclose, or a sale held while a modification was pending or a forbearance was in effect. The remedy depends on whether the sale has happened yet.
Rarely, and it is hard. Courts usually require you to tender the full debt to set aside a voidable sale, with exceptions for void sales and a few other situations. If the buyer has resold to someone who paid fair value, the case usually proceeds for money instead.
Moving a foreclosure forward while your complete loan modification application is under review. Civil Code §2923.6 bars the servicer from recording a Notice of Default or Notice of Sale, or holding the sale, until it decides the application and any appeal period runs.
It depends on the theory: four years for breach of a written contract, three for most statutory and fraud claims, two for negligence. Which one applies, and when it started, is argued case by case. Call well before the two-year mark from the sale.
Yes, but the two claims need to be coordinated. Taking the surplus can be argued as accepting the sale. We look at both before you sign a claim or cash a check.
To a limited extent. In an unlawful detainer after a trustee's sale, the buyer must prove it acquired title at a sale conducted in compliance with the statute (Code Civ. Proc. §1161a). A pending wrongful foreclosure case can also affect how the eviction proceeds.
Discuss Your Case Now
Tell Fred what happened. Callback the same business day.
Think your foreclosure was done wrong?
Bring us the notices and the modification file. We will tell you what the law required and whether the servicer did it.
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.