WATCH FOR FORECLOSURE SALE IRREGULARITIES

The Ninth Circuit recently weighed on irregularities in foreclosure sales hold that procedural irregularies void the sale as a matter of state law.

In Kekauoha-Alisa v Ameriquest Mortgage (In re Kekauoha-Alisa) F.3d ___, 2012 WL 987838 (9th Cir. 2012), the Ninth Circuit affirmed a bankruptcy court ruling setting aside a foreclosure sale.

The facts in short: A foreclosure sale was pending, but after being noticed the borrower filed bankruptcy. The foreclosing trustee or auctioner continued the sale but did not “announce the continuance” since in his belief those present at the sale were not bonafide bidders. Subsequent to the lender obtaining relief of stay to foreclose, the continued foreclosure sale went was held and the lender brought a state court action for ejectment, obtained a judgment and writ of possession. The borrower opposed it through proceedings in the bankruptcy court.

The bankruptcy court and BAP held that the sale was void since it was not held in accordance with state law which clearly provided for a foreclosure sale continuance to be announced. The Ninth Circuit affirmed.

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