Legal Question in Real Estate Law in California

Re: Payment after Notice of Default filed

The lenders may be concerned about creating a waiver of the loan terms, or they may be concerned about bookkeeping problems, or they may be trying to encourage payment in full, or some combination of the three.

I would say this: Full payment as provided for in the Civil Code absolutely, as a matter of law, stops the foreclosure process. However, part payment MIGHT throw the lender's rights into some doubt under a waiver theory. This may be why lenders refuse part payments.

The lenders doubtless have the RIGHT to refuse part payments after a default -- and I have noticed that most lenders will not accept part payments before a default. This right probably arises as a matter of contract. Somewhere in the loan agreement there is probably a clause giving the lender the right to refuse partial payments. Lenders have also been known to refuse payments from strangers - probably also a right arising from the loan agreement and enforced by the lender for some reason (unknown to me) but probably based upon bad experiences over the decades.

Re: Payment after Notice of Default filed

They are not communicating the information to you correctly, hence the confusion. A lender MAY VOLUNTARILY accept anything less than the total default amount post-NOD, however, they are not REQUIRED to do so. A lender can legally insist, once an NOD has been recorded that the borrower pay the entire default amount, or they will accept nothing. Doing so will stop the foreclosure. They can also, however, if they wish to do so voluntarily, accept less than the whole. I can't tell you why some will and some won't because it is an internal business decision on the part of the lender. The rules are clear - they can accept less IF THEY WANT TO, but it will not stop or "restart" the foreclosure clock. They are not REQUIRED to accept anything less than the full amount in default, which contrary to the foregoing will stop the foreclosure. I hope that makes sense.

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