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To borrowers who choose to allocate their resources away from debt payment towards fighting a loan servicers right to its payments and its security, the nonjudicial foreclosure process is a war of attrition which ranges from the bankruptcy court, to superior court to municipal court. The wrongful foreclosure action is often brought prior to the non-judicial foreclosure sale in order to delay the sale, but the action may also be brought after the non-judicial foreclosure sale. A wrongful foreclosure suit filed in superior court will not necessarily delay a servicers recovery of its security.While serial bankruptcy filings are often a frustrating delay to a servicer obtaining possession of its security, the wrongful foreclosure action filed in superior court is potentially the most time consuming weapon in the arsenal of the litigious borrower. A wrongful foreclosure action is an action filed in superior court by the borrower against the servicer, the holder of the note, and usually the foreclosing trustee. In most cases, a wrongful foreclosure action alleges that the amount stated as due and owing in the notice of default is incorrect for one or more of the following reasons: an incorrect interest rate adjustment, incorrect tax impound accounts, misapplied payments, a forbearance agreement which was not adhered to by the servicer, unnecessary forced place insurance, improper accounting for a confirmed chapter 11 or chapter 13 bankruptcy plan. The companion filings to such a suit (notice of pending action, injunction and/or motion to consolidate) however can delay a servicers ultimate recovery.
The reciprocal nature of attorney fees provisions in all real property notes and deeds of trust dictate that any wrongful foreclosure action be taken seriously. The only requirement for a lis pendens to be recorded is an attorneys signature that the action which is being noticed actually involves a real property claim.
Again, though, the real property security will not berecovered until a final decision on the merits in the wrongful foreclosure action is reached.