Legal Question in Real Estate Law in California

Generally, once a foreclosure sale has been concluded (i.e., the property sold or reverted back to the bank), it is too late. There is a very, very short time frame on trying to set aside a foreclosure sale when it reverts back to the bank, and almost no ability to do so if it is sold to a third-party. You need to consult with a qualified, experienced attorney who handles this sort of litigation. Do not use one of the many "mills" running around suing mortgage companies - the ones advertising on TV or radio, or who send deceptive mailers to your home. You need to contact your local County Bar Association to get a qualified referral. I would put the odds of your succeeding at very, very low, but if you really want to recover the home, then it may be worth spending the money to pursue a set aside of the foreclosure.

With respect to the "produce the note" approach - I would drop that. Not many Courts in California are finding in favor of homeowners asserting that defense.

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As to the tenants, are you sure they are living there rent free? Did they tell you? Does the bank know about them? Can you even be certain the bank owns the property? Someone else may have bought it at the foreclosure sale, or subsequently.

As to the attempt to pay in full upon the bank's producing the note, and having the payoff funds held by a notary, this is not the way to tender payment in full to redeem a defaulted note and deed of trust. The procedure for curing a default by paying the amount then due is set forth in detail in Civil Code section 2924c(a), and there is no mention of any supposed lender obligation to "produce the note."

2924c(a) starts off (in my book, anyway) with a single sentence that is 35 lines of fine print long from its initial "capital W" to its concluding period. Not the easiest law to read and understand!

Your experience trying to get a loan modification is, sadly, all too typical. Banks seem to be unable to coordinate their modification efforts with their foreclosure activities. We hear all too often of foreclosure sales that took place just before the loan modification was supposed to be approved.

I don't know of any grounds for suit here, but if the bank still owns the house, they would probably be willing to sell it to you for a low cash price, and if you needed to borrow again, you'd almost certainly have to look elsewhere for the loan.

I'd suggest you speak to a competent real estate attorney at length. The current structure of the law governing nonjudicial foreclosure through trustee's sales provides for a right of reinstatement, which is like a right to cure. I'm not sure why you chose to use a notary, but you need to speak to an attorney to see if the lender violated your right of reinstatement.