Default Featured image

No Tender is Required Pre-Foreclosure

Foreclosure and Real Estate Law by Peter N. Brewer, Esq.

In California, one of the biggest hurdles for borrowers who are challenging a foreclosure sale is the tender offer rule.  The rule requires that the borrower offer repayment of the entire amount owed prior to challenging the foreclosure.  However, in a recent appellate decision, Pfeifer v. Countrywide Home Loans, the First District Court of Appeals found that the tender offer rule did not apply because the foreclosure sale had not occurred.  In addition, the court found that a lender must comply with Federal Housing Administration (“FHA”) regulations prior to foreclosure on a FHA loan.

Facts of the Case

The Pfeifers, a son and mother, received a FHA loan in 2008.  As part of the loan, the lender, Countrywide, received a FHA California Deed of Trust that was secured against the Pfeifer’s residence in Hayward, California (Alameda County).  Unlike other deeds of trust, the FHA version specifically notes that some of the lender’s rights could be “limited by regulations issued by the Secretary” (of the Department of Housing and Urban Development).  Of importance in this case, the Federal regulations require that the lender have a face-to-face meeting with the borrowers prior to initiating the foreclosure process.

In 2009, the Pfeifers defaulted on their loan.  Countrywide initiated foreclosure proceedings.  Countrywide failed to have the statutorily required face-to-face consultation with the borrower prior to initiating the foreclosure process.  Accordingly, the Pfeifers filed suit to stop the sale and for violation of statutes.


The trial court dismissed the Pfeifers’ claim on the grounds that the Pfeifers failed to comply with the tender offer rule by offering to pay the outstanding loan amount.  Further, the trial court found that a borrower cannot maintain a suit against a lender for the lender’s failure to comply with FHA rules because the rules are for the benefit of the FHA and not the borrower.

On appeal, the appellate court reversed the lower court’s ruling and held that in situations where the foreclosure has not yet occurred, a tender is not required.  The Pfeifer Court noted that Countrywide failed to cite any cases where California courts had required a tender prior to a foreclosure.  Additionally, while violations of FHA rules do not give borrowers a right to sue the lender, the violations can be grounds to stop a foreclosure sale.  Although the State foreclosure statutes are comprehensive, the Court noted that additional requirements can be added as long as they do not frustrate the public policy behind the statutes.  Here, the FHA rules supplement, not contradict, the policy behind the statutes and therefore could be enforced by the borrower.


If a lender is dealing with a FHA loan there are substantially more rights of the borrower and requirements that must be complied with prior to foreclosure.  Although violating the FHA rules does not allow a borrower to sue for damages, the violations can be a basis to stop the foreclosure process and require the lender to start over.  Finally, if the foreclosure has not occurred, lenders need to be aware that borrowers have a greater likelihood of success challenging the trustee’s sale.

If you are dealing with a matter similar to the contents of this article and believe you need real estate legal representation, please contact the Law Offices of Peter N. Brewer at (650) 327-2900, or visit our website at

Latest Posts

Marijuana & Real Estate

Navigating the Unstable World of Real Estate and Cannabis in California

by Ashlee D. Gonzales, Esq. on June 25, 2018

Marijuana legalization in California is here, but the fact that the substance is still considered illegal at the Federal level is causing some confusion and hardships for growers and sellers. Learn about how to navigate the unknown areas in attorney [more]

Legal Update, Real Estate Law

Recreational Pot In 2018: High-Times Or A Buzz-Kill For California Real Estate?

by Adam Pedersen, Esq. on November 29, 2017

California is set to roll out new guidelines implementing the voter-mandated legalization of recreational marijuana use and production in January of 2018.  At the same time, cities and counties are scrambling to implement their own regulations before the state rules [more]

Landlord/Tenant Disputes

Progress Report on Rent Control Initiatives in Silicon Valley

by Ashlee D. Gonzales, Esq. on November 21, 2017

Few topics have drawn more heated discussions throughout the Silicon Valley real estate industry than the ever-changing and increasing rent control efforts happening all across the region. From 2011 to 2016, the median wage in San Francisco, Santa Clara, and [more]