Cal App Holds No Private Right of Action Under loan modification statute

By Charles Cox, Esq. 

Cal App Holds No Private Right of Action Under
loan modification statute
The Court of Appeal for the State of California, Fourth District,
recently held that there is no private right of action for violation
of Cal. Civ. Code §§ 2923.52 and 2923.53.
A copy of the opinion is available at: 
This matter involves a California foreclosure, where the lender
purchased the collateral at sale.  The borrowers filed a writ
proceeding with the appellate court to stay the eviction pending
further order.
The borrowers attempted among other things to invalidate the
foreclosure sale, alleging violations of Cal. Civ. Code §§ 2923.52 and
2923.53.  As you may recall, California Civil Code section 2923.52
imposes a 90-day delay in the normal foreclosure process, and
California Civil Code section 2923.53 allows for an exemption to that
delay if lenders have loan modification programs that meet certain
Enforcement of sections 2923.52 and 2923.53 is committed to regulatory
agencies, which have implicit power to terminate the license of any
company whose program is not in compliance. Section 2923.53,
subdivision (h), makes enforcement a matter of losing a license.
The Court held that, “[u]nlike section 2923.5 as construed by this
court in Mabry v. Superior Court (2010) 185 Cal.App.4th 208 (Mabry),
neither section 2923.52 or section 2923.53 provides any private right
of action, even a very limited one as this court found in Mabry.”  In
the words of the Court, “[n]ot only is there no express unmistakable
private right to sue, there is a virtually unmistakable intent not to
allow a private right to sue.”
The borrowers also sought to invalidate the foreclosure sale under
Cal. Civ. Code  § 2923.54.  However, the Court noted that “Subdivision
(b) of that statute is clear that: ‘Failure to comply with Section
2923.52 or 2923.53 shall not invalidate any sale that would otherwise
be valid under Section 2924f.’”  The Court rejected the borrowers’
argument that the statute does not apply to lenders who themselves buy
the property at foreclosure, i.e., to lenders who cannot claim the
status of bona fide purchasers, because any claim which the borrowers
might have to invalidate the foreclosure sale based on sections
2923.52 and 2923.53 necessarily entails a private right of action
which the statutes do not give them.
Because the borrowers’ claim for relief against the impending eviction
rested entirely on alleged violations of statutes which the Court held
do not afford them any private right of action, the stay of the
eviction was discharged, and the borrowers’ petition for the requested
writ was denied.

20 Responses

  1. Carrie,

    Your are ABSOLUTELY right that the mods do more harm than good. They are a SET-UP!

    If I had not been offered that piece of trash and been lied to for several months that it was still being ‘implemented’ after the permanent mod was signed, I would have worked things out so that I had the default covered. As it was, when I did find out what the f*** was up, I could not ‘time-travel back’ and do things the way I would have otherwise have handled the problem.

  2. Leapfrog,

    Back when I was offered the ‘CountryWide AG mod’, I was not aware of what was really happening.

    Oh, well, even though I signed it, THEY immediately BREACHED it. So, now we’re having other skirmishes.

  3. Here’s the absurd part: The loan mod aspect is causing more harm for homeowners than those who didn’t enter into a loan mod. I feel that the “loan mod” is just another tendril of the tangled web that the predatory lenders and servicers use to draw the borrowers closer to the spider’s maw.

  4. Walking away is not a good option! We should all fight to keep the roof over our heads. Walking away means you are handing over your home to the most undeserved entity in the matter.

  5. It’s no big deal, just remember that walking away is your best option. Let the bank do a non-judicial foreclosure so they can’t get a deficiency (one way rule).

  6. Peter: That is the EXACT reason why I did not sign the shitty mod they gave me. Your question is a very good one – hope someone in the know answers. How CAN a pretender-lender waive your legal rights on something they don’t even own? What is fraud upon fraud called?

  7. Can someonw explain this in laymen’s terms? Does this mean that if we signed a shitty loan modification that we didn’t even understand (or they theatened foreclosure) that we can not go to court to fight the fraud?

  8. So the judges are clearly stating in english that the substantive rights of living men and women do not exist in a statutory, at-law jurisdiction. In order to get any redress looks like we should be claiming rights under a trust and seek relief in a court of equity, not at law. It’s obvious the majority of the people seeking remedy in courts of law, trying to enforce statutes and codes are getting absolutely nowhere. So what on earth is the equity side of court? Hmm.

  9. Actually, Moses Hall ESQ was the attorney. Brian, wasn’t he your attorney?

  10. Actually, Linda, CA is very friendly pro se for family law matters, but that’s about it. Also, unfortunately, CA is very big-bankster friendly and could care less about homeowners. The only hope is the BK court. I’m in the middle of an AP right now & do have an attorney who “gets it”, but we will just have to wait & see. It was my last ditch effort to save my home.

  11. That sounds about right, Brian.

    Scot, I was told that if the bank owned the home, then why would they have to buy it back? I don’t get it, either.

    CA is shitty. They dismissed my BK because of a little error and never bothered to tell me. The BK attorneys I talked to didn’t “get it.”

    We really do need some help here, especially for those who need funds to fight.

    Overall, does this mean that the pro se litigants chose the wrong causes of action…thus, wrong civil codes ?

    CA is also not pro se friendly, I hear.

  12. There is only one statute cc 2923.5 that allows a private right of action prior to sale. It included lack of following this statue for those who bought between 2003 to 2007 and it must be a primary residence.
    This statute only works when you file a suit and it is before the sale. It is a fight. If the house is sold the right is gone. These courts just let the sales occur and then there is no private right of action. California is pitiful. It is banker friendly. Why is Indymac, Deutsche Bank and many more headquartered here.
    If one is lucky to get past those impossible barriers, then there is no need to produce the note. That is why they file the Notice of Default and have little worries about the documents. The only solution is federal court as in BK with adversary procedures or Third Party Suponeas. There was little reason to hold any original notes in California.
    The Banks own California. Gov. Browns own sister works for them.

  13. One of the problems with many state laws is that they conflict with each other, which makes it very difficult to figure out what actually is the enforeceable law. We can all hope that the states will set about making more laws to protect homeowners not crooked banks. Move your accounts out of the big banks and put your money in the little bank around the corner or the credit union. Another interesting trick from the big banks is that they share your personal information. You need to make sure you OPT OUT with regard to sharing info. Computers are great, but they have created their own special problems. There is no privacy.

  14. Looks like they should have looked harder for cause to deny the lift of stay in their BK case instead of going this direction.

  15. Some pro se litigants ignore the finesse of court proceedings and do not do the necessary research just as there are thousands of lawyers that are so lazy, it actually hurts to think about it.

    Some do face a court system that does not want to accept the fact that the bankers and their affiliates and those who represent them are crooks, mafioso felons.

    I am curious why we the people were able to go after big tobacco and big pharma, car makers, mining concerns, etc. but when it comes to banks there is the false preconception the they are clean dealing outfits.

    Nothing further from the truth. But we are turning the corner, slowly but for certain

  16. Mortgage Lenders Setback in Courts.

    It is all about ownership of the loan and comingling of funds. The WallStreet Journal is starting to get it.

  17. If the lender (Bank) owns the note, why do they purchase the property at the sherriff sale? Why not just take poscession? If the lender has the note and the mortgage they should just be able to open the bid for what is owed, then if no-one bids the lender (Bank) should just take the property back and then sell it themselves. I went thru a commercial foreclosure this year in Wisconsin and the lawyer and the court doesn’t need the orignal douments for a foreclosure.A copy is good enough! So the day of the sherriff sale the Banks lawyer bought the property for 130,000.00 less than what was owed.Now they are trying to sell it for the full amount owed. My question is if they own the note and mortgage why did they purchase the property. The courts say you borrowed the money, you owe the money, you didn’t pay the money, so the court awards the property to the Bank. There is no reason to purchase the property if it is yours to begin with. You (Bank) should just be able to take it and sell it. Any thoughts on this would be helpful.

  18. Sounds like some judges are mad about their pensions taking a dive.

  19. Who was these folks atty? Seems one could read these statutes and see who had a right to enforce and who did not.

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