Legal Question in Real Estate Law in California

It depends on two key factors that you have left out of your question. The power of sale and other powers under a deed of trust with assignment of rents may be exercised in the event of default, and only in the event of default. So first off you don't mention whether paying interest only complies with the terms of the loan. If it is an interest only loan and the balloon payment hasn't come due, then keeping current on the interest payments is not a default. If paying interest is not sufficient to comply with the terms of the loan, then you are in default even if you are current on the interest. Secondly, you don't state whether there are any OTHER events of default. Not paying installment payments in full, when due is the most common form of default, but it is not the ONLY form of default under most loan agreements. Any uncured default will give rise to the rights of the lender to exercise the powers under the deed of trust.

The borrower must comply with all the major loan terms in order to be free from the possibility of a default and trustee's sale. You mention only that the borrower is current on interest payments. What about the principal portion of the payments, if called for? Is the borrower keeping the property insured? Is the borrower paying the property taxes? Maintaining the property properly? Failure to do any of these things, and others, probably would be a default and thus trigger the lender's right to foreclose.

I agree with the other attorneys. It depends on whether you are in default. The lender cannot exercise the power of sale in a deed of trust unless the borrower is in default, but you should have your note and deed of trust reviewed by a competent real estate attorney if you think you are not in default and the lender is taking steps to foreclose.