Southern California Homeowner Scores TRO Stalling Foreclosure Sale; Lender Duped Borrower Into Defaulting On House Payments: Judge

In San Diego, California, Courthouse News Service reports:

• A La Jolla man can keep his home for now, after a federal judge granted his motion for a temporary restraining order blocking Washington Mutual and JP Morgan from foreclosing on his house because the banks misled him into defaulting on his mortgage. Kaveh Khast claimed the banks instructed him to stop making his mortgage payments so he could qualify for a loan modification.(1)

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• Because the bank told him to stop making his payments and to default on his loan, [U.S. District Judge Irma] Gonzalez found that Khast was irreparably harmed and entitled to an order temporarily halting foreclosure proceedings. "If the sale of plaintiff's property proceeds as scheduled, plaintiff will lose his home," Gonzalez wrote. "Even if defendants were ultimately to prevail, a temporary restraining order will only force them to delay the sale of the property by a matter of days."

For more, see California Man Gets to Keep His House, for Now.

For the court's ruling, see Khast v. Washington Mutual Ban, et al.

(1) Earlier this year, a California appeals court applied the doctrine of promissory estoppel against a foreclosing lender in a case in which a borrower relied on the verbal promise of a bank's employee to do something he wouldn't otherwise have done in the hope of stalling a foreclosure sale. See Garcia v. World Savings FSB, 183 Cal. App. 4th 1031 (2010):

• "Under this doctrine a promisor is bound when he should reasonably expect a substantial change of position, either by act or forbearance, in reliance on his promise, if injustice can be avoided only by its enforcement." (Youngman v. Nevada Irrigation Dist., supra, 70 Cal.2d at p. 249.)

• "'The vital principle is that he who by his language or conduct leads another to do what he would not otherwise have done shall not subject such person to loss or injury by disappointing the expectations upon which he acted.'" (Wilson v. Bailey (1937) 8 Cal.2d 416, 423, quoting Carpy v. Dowdell (1897) 115 Cal. 677, 687.)

• "'In such a case, although no consideration or benefit accrues to the person making the promise, he is the author or promoter of the very condition of affairs which stands in his way; and when this plainly appears, it is most equitable that the court should say that they shall so stand. [Citations.]'" (Wade v. Markwell & Co. (1953) 118 Cal.App.2d 410, 420.)

See also:

• Wrongful foreclosure – verbal assurance that foreclosure sale will be postponed may be enforceable (if link expires, TRY HERE, then click link for the story).
• Court: "Promissory Estoppel" Could Make Lender’s Verbal Agreement To Halt F'closure Sale Enforceable, Even Absent Consideration For Promise To Stall.