Michael and Ruth Selesia fell behind on payments for their $15,000 home mortgage held by Bank of America. The lender began foreclose on the house.

Just four days before the scheduled foreclosure sale, the borrowers paid the late payments at a Bank of America branch and their mortgage was reinstated.

Purchase Bob Bruss reports online.

However, Bank of America failed to cancel the foreclosure sale after the mortgage was reinstated.

The foreclosure sale took place as planned. Alan Boyajian, acting on behalf of the La Jolla Group II partnership, submitted a high bid of $15,500. Boyajian, who is in the business of buying properties at foreclosure sales, estimated the fair market value of the house was $115,000.

A deed was issued to La Jolla Group. It was recorded a few days later.

But five days later, a Bank of America representative informed Boyajian and La Jolla Group a mistake had been made and the foreclosure sale never should have taken place because the Selesia home loan had been reinstated by the lender.

Meanwhile, La Jolla Group filed an unlawful detainer eviction to remove Michael and Ruth Selesia from their home.

Bank of America attempted to rescind the recorded foreclosure sale deed. The borrowers sued Bank of America and the foreclosure sale buyer, La Jolla Group.

If you were the judge would you rule La Jolla Group was the successful foreclosure sale buyer entitled to evict the borrowers?

The judge said no!

Before the foreclosure sale, the judge began, Bank of America accepted the missing mortgage payments from the borrowers and reinstated their home mortgage. But the lender failed to cancel the scheduled foreclosure sale, although it had four days to do so, he noted.

Because the reinstated home loan was in good standing at the time of the foreclosure sale where La Jolla Group was the high bidder, the judge continued, Bank of America was not entitled to foreclose on its reinstated mortgage.

The foreclosure sale was invalid and void, the judge ruled. Therefore, La Jolla Group’s deed did not convey title and Bank of America must refund the $15,500 paid by La Jolla Group, the judge concluded.

Based on the 2005 California Court of Appeal decision in Bank of America v. La Jolla Group II, 28 CalpRptr.3d 825.

(For more information on Bob Bruss publications, visit his
Real Estate Center
).

***

What’s your opinion? Send your Letter to the Editor to opinion@inman.com.

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