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Real Property Law

Cal. Real. Prop. Journal 2019, VOL. 37, NO. 1

California Lenders Must Be Diligent Not to Get Burned Twice: A Reminder of the Consequences of the Full Credit Bid Rule in Light of the California Wildfires

Kathryn A. Moorer and T. Robert Finlay

Kathryn A. Moorer is a senior associate at Wright, Finlay & Zak. She focuses on real estate litigation, including lender and servicer liability defense, wrongful foreclosure defense, California’s Homeowner’s Bill of Rights compliance disputes, fair debt collection practices/credit reporting defense, title disputes, habitability and landlord-tenant disputes, bankruptcy adversary actions and appeals in both state and federal court. In addition, Ms. Moorer has extensive experience responding to consumer complaints filed with the California Department of Business Oversight and Consumer Financial Protection Bureau.

T. Robert Finlay is a founding partner of Wright, Finlay & Zak. He has focused his legal career on consumer finance and mortgage-related litigation, compliance, and regulatory matters. Mr. Finlay is at the forefront of the mortgage banking industry, handling all aspects of the ever-changing default servicing and mortgage banking litigation area, including compliance issues for servicers, lenders, investors, title companies, and foreclosure trustees.

Recently, multiple wildfires swept across the State of California leaving a wake of destruction in their path. The fires destroyed a multitude of residential properties and the entire Northern California city of Paradise. While foreclosure moratoriums will temporarily stop all foreclosure activity, they will eventually be lifted, giving lenders the option to foreclose on affected properties that serve as security for defaulted loans. Before going to sale on a fire damaged property, lenders should understand the risks created by their foreclosure bids, including, but not limited to, the potential loss of the lender’s right to insurance proceeds.

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