Q: I am in foreclosure but my bank will not accept the payoff.

A: There are not enough facts in your question to provide you with a specific response. But assuming the property is in California and the foreclosure is non-judicial (trustee sale), which is common in the state, you have the right of redemption before a foreclosure sale. Your right to redeem ends when your property is foreclosed.

You also did not indicate the foreclosure date, but it’s best to take appropriate action early on when you have more options to work with, such as reinstating the loan, loan modification, repayment plan, forbearance, etc. In your case, payoff, which generally requires you to pay the remaining balance, including other fees and costs should be requested in advance as the lender must receive your payment well before the foreclosure sale date.

You did not indicate why the bank did not accept your payoff, as the bank would rather accept your payment than going through with the foreclosure. If you did not remit the full payment, the bank may have rejected your payment. If you have a dispute as to the payoff amount, delaying it will not stop the foreclosure. So it would be best to work on any dispute, if any, while you have time.

A: If you are attempting to pay off the mortgage to stop the foreclosure, the bank is generally obligated to accept the payoff amount as long as it is the correct amount owed. Under California law, the bank must provide a payoff statement that includes the total amount needed to satisfy the mortgage debt. If the bank is refusing to accept the correct payoff amount, it may be violating state law, and you should consult with an attorney experienced in foreclosure and real estate matters to protect your rights and explore your legal options.

James L. Arrasmith

Founder and Chief Legal Counsel of The Law Offices of James L. Arrasmith