Taniguchi v. Restoration Homes, LLCAnnotate this Case
The Taniguchis obtained a $510,500 home loan, secured by a deed of trust. A 2009 loan modification reduced their monthly payments and deferred until the loan's maturity approximately $116,000 of indebtedness. The modification provided that failure to make modified payments as scheduled would be default so that the modification would be void at the lender’s option. The modification left unchanged the original acceleration clauses and power of sale. The Taniguchis defaulted on the modified loan and were informed that to avoid foreclosure, they would have to pay their four missed payments and associated late charges, foreclosure fees and costs, plus all sums deferred under the modification (about $120,000 in principal, interest and charges). The Taniguchis filed suit. Restoration recorded a notice of trustee’s sale. The Taniguchis obtained a temporary restraining order. The Taniguchis alleged violations of Civil Code section 2924c by demanding excessive amounts to reinstate the loan, unfair competition, breach of contract, and breach of the covenant of good faith and fair dealing. The trial court entered judgment in favor of Restoration. The court of appeal vacated in part. When principal comes due because of a default, section 2924c allows a borrower to cure that default and reinstate the loan by paying the default amount plus fees and expenses. Section 2924c gives the Taniguchis the opportunity to cure by paying the missed modified payments and avoid the demand for immediate payment of the deferred amounts. Nothing in the loan modification suggests that the Taniguchis forfeited that opportunity; section 2924c does not indicate that a forfeiture would be enforceable.