By Charles Cox, Esq.
Cal App Holds No Private Right of Action Under
loan modification statute.
The Court of Appeal for the State of California, Fourth District,
recently held that there is no private right of action for violation
of Cal. Civ. Code §§ 2923.52 and 2923.53.
A copy of the opinion is available at:
This matter involves a California foreclosure, where the lender
purchased the collateral at sale. The borrowers filed a writ
proceeding with the appellate court to stay the eviction
pending further order.
The borrowers attempted among other things to invalidate the
foreclosure sale, alleging violations of Cal. Civ. Code §§ 2923.52
As you may recall, California Civil Code section 2923.52 imposes
a 90-day delay in the normal foreclosure process, and California
Civil Code section 2923.53 allows for an exemption to that delay
if lenders have loan modification programs that meet certain criteria.
Enforcement of sections 2923.52 and 2923.53 is committed to
regulatory agencies, which have implicit power to terminate the
license of any company whose program is not in compliance.
Section 2923.53, subdivision (h), makes enforcement a matter of
losing a license.
The Court held that, “[u]nlike section 2923.5 as construed by this
court in Mabry v. Superior Court (2010) 185 Cal.App.4th 208
(Mabry), neither section 2923.52 or section 2923.53 provides
any private right of action, even a very limited one as this court
found in Mabry.” In the words of the Court, “[n]ot only is there
no express unmistakable private right to sue, there is a virtually
unmistakable intent not to allow a private right to sue.”
The borrowers also sought to invalidate the foreclosure sale under
Cal. Civ. Code § 2923.54. However, the Court noted that
“Subdivision (b) of that statute is clear that: ‘Failure to comply
with Section 2923.52 or 2923.53 shall not invalidate any sale
that would otherwise be valid under Section 2924f.’”
The Court rejected the borrowers’ argument that the statute does not apply
to lenders who themselves buy the property at foreclosure, i.e.,
to lenders who cannot claim the status of bona fide purchasers,
because any claim which the borrowers might have to invalidate
the foreclosure sale based on sections 2923.52 and 2923.53
necessarily entails a private right of action which the statutes do
not give them.
Because the borrowers’ claim for relief against the impending
eviction rested entirely on alleged violations of statutes which
the Court held do not afford them any private right of action,
the stay of the eviction was discharged, and the borrowers’
petition for the requested writ was denied.