Servicer Wrongfully Foreclosed after Borrower Tendered the
Amount Due on the NOD
In re Takowsky, 2014 WL 5861379 (B.A.P. 9th Cir. Nov. 12, 2014)
Notices of default must specify the “nature of each breach actually
known to the [loan] beneficiary,” including a statement of how much
the borrower is in default.
Whatever the actual default amount, the
amount listed on the NOD controls. “Recurring obligations,” however,
do not need to be listed in an NOD to still be due in borrower’s
reinstatement. A “recurring obligation” is limited to “obligations
secured by the trust deed involved in the foreclosure.”
Here, the NOD
stated that borrower had breached the deed of trust on her second
loan, and listed amounts due accordingly. It made no mention of senior
liens. Borrower paid her servicer the amount due on the NOD.
“In doing so,” the bankruptcy court found, “[borrower] cured the only
default explicitly listed in the NOD,” and by accepting that payment,
servicer was prevented from foreclosing. Borrower’s actual default on
the senior lien was found irrelevant because that default was not listed
on the NOD.
Servicer’s subsequent foreclosure was determined to be
wrongful because servicer had no power of sale under the NOD. On
appeal, servicer argued the bankruptcy court erred when it held that
servicer could not exercise the power of sale under the NOD. The
B.A.P. agreed with the bankruptcy court. The unlisted liens were not
“recurring obligations” that could have been omitted from the NOD
and yet still required in any reinstatement. The B.A.P. affirmed the
bankruptcy court’s prior holding.
Fn 23 The previous iteration of this case is summarized in Case Compendium as In re
Takowsky, 2013 WL 5183867 (Bankr. C.D. Cal. Mar. 20, 2013); 2013 WL 5229748
(Bankr. C.D. Cal. July 22, 2013). In the current case, the B.A.P. reviewed and
affirmed the bankruptcy court’s decision.