Can borrower come current in the last 5 days before a scheduled sale?


#1

Under the notice of trustee sale requirements, it is stated:

The defaulting borrower may prevent the foreclosure sale by paying all arrearages up to five (5) days before the sale.

In the last 5 days before the sale, I’ve heard the borrower must redeem/pay off the loan. Is this still the case given the current market or has Civil Code/law changed that allows a borrower to come current but not pay off the loan in the last 5 days? Obviously, a decision to postpone the sale in the last 5 days happens frequently, but the Asset Manager should know which borrower have not come current. In your experience, is it possible to find out from the Asset Manager which loans are not current and should be held for sale, excepting those sales that are postponed at the last minute for whatever reason?

Thank you.


#2

It is my understanding that under the letter of the law the trustee can refuse to reinstate the loan if payment of the arrearages is not made within 5 days of the sale date.
This does not mean that the trustee cannot cancel or postpone the sale right up until the moment the sale is suppose to happen regardless of whether or not the arrearages were paid. We are in unprecedented times in terms of the postponements and cancellations. It appears that through the various government intervention programs we are lacking the political will to foreclose. Not to mention is appears that the lenders are using the foreclosure process as a method of balance sheet management since they do not need to report the loss until they actually foreclose on the property.


#3

Let me add:

  1. that I’ve never seen a lender deny a reinstatement when an owner walks up with the cash moments before the sale, let alone 2 or 3 days early.

  2. there has never been a requirement to “payoff” the loan to stop the sale… the law only says that the lender does not have to reinstate the loan within the last 5 days… but they usually do, see 1 above.

  3. All loans scheduled for foreclosure sale are “not current and should be held for sale”, yet they are postponed all the time, lately for no apparent reason whatsoever.