Vincent Howard and our Corona foreclosure defense lawyers were saddened to read a case permitting a foreclosure buyer to proceed with an eviction of a family of nine. In In re Fadel, Fanda Hezam Fadel filed for bankruptcy two days before the foreclosure sale of her family's home. Unfortunately, the family home was in the name of her husband, Mohamed Fadel, as sole and separate property. As a result, when Fanda filed her bankruptcy petition in 2011, Bank of America went ahead with the foreclosure sale and DCB United LLC, trustee of a trust, purchased the home. The bankruptcy court granted DCB relief from the automatic stay to proceed with its unlawful detainer action kicking the Fadels and their seven children out of the home, and the BAP for the Ninth Circuit affirmed.
The Fadels, of La Quinta, bought their home in 2001. Fanda has worked outside the home only intermittently; the home was put in the name of "Mohamed Fadel, a married man, as his sole and separate property." On the same day, Fanda signed a grant deed conveying any interest in the property to her husband. In 2003, Mohamed took out a loan against the property solely in his own name. They came under threat of foreclosure in late 2010 or early 2011, and Mohamed filed for Chapter 7 bankruptcy at the end of January 2011. This did not stop the foreclosure. Fanda filed for bankruptcy on July 20, 2011, and listed no co-debtors. The bank followed through with its foreclosure sale and sold the home to DCB. Her plan proposed payments of arrears to Bank of America and was confirmed over DCB's objections. However, the bankruptcy court later realized Fanda's interest in the property was an issue and ultimately lifted the automatic stay, rejecting a variety of creative arguments that she had an interest in the property.
The Bankruptcy Appellate Panel for the Ninth U.S. Circuit Court of Appeals ultimately agreed. DCB was not a creditor of Fanda's, the panel said, which even Fanda agreed with; thus, it could not be bound by the bankruptcy plan confirmation order. The panel also upheld the decision to lift the automatic stay. A bankruptcy estate is made of all of the debtor's property interests, and Fanda did not have a property interest in the home, it found. In so ruling, the court found that the description in a deed of how title is held trumps the community property ownership presumption. The recorded grant deed and the interspousal deed and other documents support the presumption that the home was held only by Mohamed. Fanda could rebut this with a showing of undue influence by her husband, but she raised first in a motion for reconsideration, the panel said, and it contradicted her earlier statement that her cultural beliefs require property to be titled in only the husband's name. And in any case, the panel held, this would make the conveyance only voidable, not void. Rejecting several other arguments, it upheld the bankruptcy court.
Vincent Howard and our Santa Ana foreclosure defense attorneys are sorry to see the outcome, which will undoubtedly be a financial hardship for this large family. It would be interesting to see the history of Mohamed Fadel's bankruptcy, to understand why it wasn't able to stop the foreclosure. Many people got in financial trouble during the real estate boom because they borrowed against homes and then lost the income they needed to repay those debts when the economy soured. Sometimes, a bankruptcy can slow but not stop a foreclosure, because the filer doesn't have the income to repay the loan even with the pause and reorganization that bankruptcy permits. That's why Vincent Howard and our San Bernardino County foreclosure defense lawyers prefer to plan our clients' bankruptcies carefully, taking into account their needs and any unusual situations like the Fadels'.
If you're facing a foreclosure that you believe you can avoid through bankruptcy or litigation, don't wait to call Howard Law, P.C., to discuss how we can help. You can reach us through our website or call 1-800-872-5925.