Legal Question in Real Estate Law in California

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Don't you get monthly statements? It seems very odd that you didn't have some notification of a change in amount due monthly. I assume you have some kind of adjustable rate loan (the lender cannot change you monthly amount due from pure whim; the changes must be based upon the terms of your loan agreement).

Lenders are permitted to return insufficient payments. If you submitted checks attempting to pay the old monthly amount due after an increase in the monthly payment, BofA was not in error in rejecting the entire attempted payment.

At this point, I assume BofA has sent you a Notice of Default. Although a free consultation with an attorney might be helpful, I think the proper course at this point is to enter into meaningful discussions with BofA about (1) why a misunderstanding may have occurred, and (2) what you can now do to restore the loan to non-default status. Probably you will be asked to pay the full amount of the unpaid payments, plus the bank's penalties and costs to date. This will cure the default and reinstate your loan.

Once your loan is again current and not in default, you may want to shop around for a refinancing with another lender, or negotiate a modification with BofA, but doing either before correcting the existing default will not be easy nor will you get the best deal.

I suggest reinstatement, and then negotiation to determine where the error is. Letting your home go to a trustee's sale and be foreclosed on is dangerous, and is very difficult to set aside after the fact. Lenders and trustee's are getting out of set aside lawsuits, arguing that an action to set aside a foreclosure requires tender of the entire unpaid amount of the loan, which I am sure you are not able to do. It is far better to reinstate, which is a much smaller amount than the entire unpaid debt.