A homeowner submits a loan modification application in the spring. The servicer says it is “under review.” Three weeks later, a Notice of Trustee’s Sale arrives with an auction date on it. In another case, a homeowner learns only after the auction that the company that ordered the sale may never have held the loan.
California law sets specific rules for how a foreclosure must be carried out, who may carry it out, and how a servicer must treat a borrower who is trying to avoid it. When those rules are broken, a homeowner may have legal claims. Whether they do, and what a court can do about it, depends on the facts, the type of claim, and one factor above all: whether the sale has already happened.
What Is Wrongful Foreclosure in California?
A wrongful foreclosure claim argues that a foreclosure sale, or the conduct leading up to it, did not comply with the law. The claim is not simply that the homeowner disagrees with the lender or fell behind on payments. It points to a specific legal violation and to harm the violation caused.
California has two foreclosure methods. In a judicial foreclosure, the lender sues and a court oversees the process. In a nonjudicial foreclosure, the lender uses a power of sale written into the deed of trust, the document that secures most California home loans. A deed of trust involves three parties: the borrower, the lender (called the beneficiary), and a trustee who holds a power to sell the property if the loan is not paid.
Most California residential foreclosures are nonjudicial, and no judge reviews them along the way. The process generally runs in three steps under Civil Code section 2924:
- Notice of Default. The foreclosing party records a notice stating that the borrower is in default. At least three months must pass before a sale can be noticed.
- Notice of Trustee’s Sale. This notice gives the auction date, time, and place. Mailing, posting, and publication rules apply, and the notice must go to the borrower at least 20 days before the sale.
- Trustee’s sale. The property is sold at public auction. A sale is generally final once the trustee accepts the winning bid.
Because no court is involved, a homeowner who believes the process went wrong usually has to bring the issue to court by filing a lawsuit.
When Can a Foreclosure Be Considered Wrongful?
A late payment, a loan dispute, or a technical error does not by itself make a foreclosure wrongful. Courts generally look for a real violation that harmed the homeowner. The situations below are the ones that most often raise legitimate questions.
Defective or missing notices
The law requires notices to be recorded, mailed, and in some cases posted or published within set timeframes. A homeowner who never received a Notice of Default because it went to an old address, or whose notice listed the wrong sale information, should have that reviewed. A notice problem matters most when it cost the homeowner a real chance to cure the default, negotiate, or seek help.
A foreclosing party without authority
Only the holder of the loan, the trustee, or an agent the holder has designated may start a nonjudicial foreclosure. Loans are often sold and transferred, and each transfer should leave a paper trail. If the recorded assignments or the trustee substitution show that the party ordering the sale had no right to do so, the foreclosure may be vulnerable.
The California Supreme Court has held that a borrower may challenge a foreclosure after the sale based on an assignment that was void, meaning legally ineffective from the start (Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919). Defects that only make an assignment voidable are treated differently, and the court left other questions open. Servicers must also support the documents they record with competent and reliable evidence, which gives attorneys another place to look.
Servicing and payment errors
Mortgage servicers sometimes misapply payments, charge improper fees, or declare a default that does not exist. A servicer may also reject a proper offer to reinstate the loan. In one California case, the Court of Appeal held that a servicer’s wrongful refusal of a timely cure offer could support a wrongful foreclosure claim without the borrower first paying the entire loan balance (Turner v. Seterus, Inc. (2018) 27 Cal.App.5th 516). Federal rules also generally keep a servicer from starting the foreclosure process until the loan is at least 120 days past due, as the Consumer Financial Protection Bureau explains.
Loan modification problems and dual tracking
Dual tracking happens when a servicer reviews a loan modification application while moving the foreclosure forward at the same time. For covered loans, California law restricts this. If a borrower submits a complete first-lien modification application at least five business days before a scheduled sale, the servicer generally cannot record a notice of default or notice of sale, or hold the sale, while the application is pending.
If the servicer denies the application in writing, the borrower generally has at least 30 days to appeal. The foreclosure steps stay on hold until the appeal period ends and any appeal is decided. These protections turn on details: whether the application was complete, when it was submitted, and whether the loan is covered.
Other conduct that can undermine a sale
A sale may also be open to challenge if it was held when there was no default, after the loan was reinstated or paid, or in a way that breached the foreclosure statutes. Fraud or unfair conduct by the foreclosing party can also matter. Each of these still requires proof of the violation and of resulting harm.
Homeowner Bill of Rights Claims vs. Common-Law Wrongful Foreclosure Claims
Two different kinds of claims often come up, and their rules differ.
Homeowner Bill of Rights claims. The California Homeowner Bill of Rights is a set of statutes that regulate servicers’ conduct, including contact with borrowers before a notice of default, dual tracking, and the single point of contact a borrower may request. Most of these protections apply only to first-lien loans on owner-occupied homes with no more than four units, and some do not apply to small servicers. A homeowner must show a “material” violation, meaning one that is significant or important, and the remedies depend on timing under Civil Code section 2924.12.
Common-law wrongful foreclosure claims. This is a claim developed through court decisions. Courts generally require a homeowner to show that the sale was illegal, fraudulent, or willfully oppressive, that the homeowner was harmed, and that the homeowner either tendered the amount owed or is excused from doing so (Lona v. Citibank, N.A. (2011) 202 Cal.App.4th 89). This claim generally depends on a completed sale.
The two can overlap, and one set of facts may support both. But a homeowner who wins under one theory has not necessarily established the other. The statute also states that its remedies are in addition to rights under other laws.
Can You Stop a Foreclosure Before the Sale?
Sometimes, but not automatically. Before a sale, a homeowner has more options than afterward, and timing drives everything. Practical steps while a sale is pending include:
- Find the sale date. It appears on the Notice of Trustee’s Sale. Every deadline works backward from that date.
- Compare the notices to the facts. Check the address, the loan amount, the identity of the lender and trustee, and whether the servicer’s account of your payments matches yours.
- Put communications in writing. If a loan modification is an option, submit a complete application, keep proof of when and how it was submitted, and ask the servicer to confirm in writing that it is complete.
Talk to a housing counselor. HUD-approved counselors provide free, confidential help with foreclosure options. You can find one through HUD’s housing counseling program. Each California court also has a Self-Help Center that provides free legal information.
Calling the lender or filing a complaint with a government agency does not by itself cancel a scheduled sale, and submitting an application does not guarantee a pause. A trustee can postpone a sale, but is not required to simply because a homeowner asks.
If there is evidence of a specific violation, a homeowner can ask a court for a temporary restraining order or an injunction, which is a court order that blocks a sale. Under the Homeowner Bill of Rights, a court can issue an injunction against a material violation before the trustee’s deed is recorded, and the injunction can remain in place until the violation is corrected. Courts do not grant these requests automatically. The homeowner generally needs evidence, and in practice the request should reach a judge before the auction, because a sale is generally final once the trustee accepts the winning bid.
What If Your Home Has Already Been Sold?
Challenging a completed sale is harder. The homeowner generally has to prove the violation, show the violation caused real harm, and deal with the tender rule. The new owner’s position also matters.
If the property was sold to a bona fide purchaser, meaning a buyer who paid value without notice of the problem, the Homeowner Bill of Rights states that a violation does not invalidate that sale. Another statute makes certain recitals in the trustee’s deed about notice conclusive in favor of such buyers. In those situations, a court may be unable to undo the sale, even if a damages claim remains.
A sale also does not stop eviction. A buyer can start eviction proceedings, and those cases move on shorter timelines than most lawsuits. A homeowner who is considering a wrongful foreclosure claim should address the eviction question right away.
The tender rule
Tender means making an unconditional offer to pay the full amount of the secured debt, not just the missed payments. Courts generally explain the rule this way: setting aside a sale does little for a borrower who still owes the loan and could be foreclosed on again. A homeowner challenging a completed sale generally must allege the ability to tender, unless an exception applies.
California courts have recognized several exceptions. Tender is generally not required where the homeowner attacks the validity of the underlying debt, where the homeowner has a claim that would offset the amount owed, where requiring tender would be inequitable, or where the trustee’s deed is void on its face. Courts have also excused a full payoff in some cases involving a wrongly rejected cure offer or a void assignment.
The rule is not applied the same way to every claim. One Court of Appeal has held that a borrower did not need to tender the loan balance to state a dual-tracking claim under the Homeowner Bill of Rights (Valbuena v. Ocwen Loan Servicing, LLC (2015) 237 Cal.App.4th 1267). Whether tender is required, and whether an exception applies, is often one of the first questions in a post-sale case.
What Legal Remedies May Be Available?
The available remedy depends on the claim and the stage of the foreclosure. A homeowner may not qualify for every remedy below.
- Injunction. A court order stopping a sale that would violate the law. It is available before the sale or, under the Homeowner Bill of Rights, until the trustee’s deed upon sale is recorded.
- Setting aside the sale. A court may undo a completed sale when the legal requirements are met, including tender or an exception. It is generally not available against a bona fide purchaser.
- Damages. After a sale, the Homeowner Bill of Rights allows recovery of actual economic damages caused by a material violation that was not corrected before the deed was recorded. Common-law claims may allow damages for losses such as lost equity, moving costs, and, in some cases, emotional distress.
- Enhanced damages. If a Homeowner Bill of Rights violation was intentional, reckless, or willful misconduct, the court may award the greater of three times actual damages or $50,000.
- Attorney’s fees. A court may award reasonable attorney’s fees and costs to a borrower who prevails on a Homeowner Bill of Rights claim.
Other relief. When ownership itself is disputed after a foreclosure, a quiet title action may be part of the case. It is a separate claim with its own requirements.
No remedy is guaranteed. A servicer that corrects a Homeowner Bill of Rights violation before the trustee’s deed is recorded may avoid liability for it.
What Evidence Should You Keep?
A foreclosure case is largely a timeline case. Attorneys use records to determine who held the loan, what the servicer knew, what the homeowner submitted, and when. Keep originals and make copies of:
- Every Notice of Default and Notice of Trustee’s Sale, with the envelope or mailing record if you have it
- Mortgage statements, bank records, and payment confirmations
- Loan modification applications, supporting documents, and proof of when and how you submitted them
- Letters, emails, portal messages, and texts from the servicer
- Notes on phone calls: date, time, the representative’s name, and what was said
- Any trustee’s sale notices, postponement notices, and the trustee’s deed if the home was sold
- Complaints filed with government agencies and any responses
Public records matter too. Notices, assignments, substitutions of trustee, and trustee’s deeds are recorded with the county, and a title company can provide them. Guidance on reviewing a property title report can help you see which recorded documents to look for.
How Long Do You Have to Challenge a Wrongful Foreclosure?
There is no single deadline. The time limit depends on the legal claim, the conduct involved, and whether the sale has occurred. A statutory claim, a fraud claim, and a contract claim can each follow different rules, and the clock may start at different points.
Before the sale, the practical deadline is the auction date. After the sale, delay creates other problems: the property may be resold, evidence may be lost, and an eviction may already be underway. Anyone who suspects a problem should have it reviewed promptly rather than waiting to see how the foreclosure plays out.
When Should You Contact a California Wrongful Foreclosure Attorney?
Several situations call for prompt legal review:
- You received a Notice of Trustee’s Sale while a complete loan modification application was pending
- The servicer denied your application and the foreclosure continued before the appeal period ended
- The company conducting the foreclosure cannot show it holds the loan or acts for the holder
- You never received required notices, or the notices contain errors about the debt or sale
- The servicer rejected a payment, misapplied payments, or refused to reinstate the loan
- Your home was sold and you believe a legal violation occurred
An attorney experienced in California real estate litigation can review the loan documents, the servicing history, and the recorded foreclosure documents; identify potential claims; and determine whether urgent court action or another remedy may be available. Legal review does not guarantee a particular result, but it can clarify what the records show and what options remain.
Speak With a California Real Estate Litigation Attorney
Kassouni Law represents private parties in real estate and property rights disputes. If you believe your home was wrongfully foreclosed, the firm can review the circumstances and discuss the legal options that may be available. Kassouni Law represents property owners, not lenders, mortgage servicers, or government agencies.
To discuss a potential wrongful foreclosure claim, contact Kassouni Law or call (877) 770-7379. Submitting a contact form does not create an attorney-client relationship.
Frequently Asked Questions
Can I sue my mortgage lender for wrongful foreclosure in California?
Possibly. A lawsuit may name the lender, the servicer, or the trustee, depending on who committed the violation. The homeowner generally has to show a specific legal violation, harm caused by it, and compliance with the requirements of the claim. A missed payment or dispute over the loan does not establish a claim by itself.
Can I stop a foreclosure if my loan modification application is pending?
For covered loans, state law may bar the servicer from moving forward while a complete first-lien application is pending. The protection depends on completeness and timing, and it does not cancel a sale on its own. If a sale date is close, ask the servicer for written confirmation of the application status and seek legal advice immediately.
Can I get my home back after a wrongful foreclosure sale?
Sometimes, but not automatically. A court may set aside a sale if the legal requirements are met, including tender or an exception. If the home went to a bona fide purchaser, the remedy may be limited to money damages.
What evidence do I need to prove wrongful foreclosure?
The goal is to document a timeline and the harm. The records listed above are the starting point, and an attorney may obtain more, such as the servicer’s account history and the loan’s transfer records. Evidence of loss, like lost equity or relocation costs, supports a damages claim.
How long do I have to file a wrongful foreclosure lawsuit in California?
No single deadline applies. Each theory has its own time limit, and some periods may run from the sale while others may run from when the problem was or should have been discovered. Because delay can narrow the available remedies, the facts should be reviewed as soon as a possible violation comes to light.
The information provided here is for general informational purposes only and is not legal advice. Foreclosure law is fact specific, deadlines vary, and the information above may not apply to your situation. Consult a qualified California attorney about your circumstances.
