The home on Bottlebrush Court was built in the early 1980s. The Oceanside property features four bedrooms, two baths and almost 1,600 square feet of living space on a 6,100-square-foot lot just south of the San Luis Rey River.
When it was put up for public foreclosure auction under a trustee sale in late 2022, county property records show the longtime owner owed almost $49,000 to his lender.
Early the next year, the property was sold for $152,000, those records show -- not to the auction's win
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The home on Bottlebrush Court was built in the early 1980s. The Oceanside property features four bedrooms, two baths and almost 1,600 square feet of living space on a 6,100-square-foot lot just south of the San Luis Rey River.
When it was put up for public foreclosure auction under a trustee sale in late 2022, county property records show the longtime owner owed almost $49,000 to his lender.
Early the next year, the property was sold for $152,000, those records show -- not to the auction's winning bidder, but to a buyer who outbid them days after the sale closed.
Under a special provision of state law, certain eligible bidders can outbid auction winners, provided the last highest auction bidder isn't a prospective owner-occupant. To qualify, those eligible bidders must meet one of a list of certain conditions -- such as being a qualified tenant-buyer, living in the home for at least a year or agreeing to legally restrict the property as affordable housing for 30 years.
But the property records show the ultimate winning bidder for the home on Bottlebrush Court -- an entity known as DS Housing CCCRR-01 LP -- did not restrict it as an affordable property as required. Instead, the new owner renovated the home and put it back on the market.
"Welcome home to your remodeled Oceanside retreat," the online ad gushed. "Step into the light and bright embrace of this spacious single-story Oceanside home, beautifully remodeled for modern coastal living."
The house sold for $890,000 in March 2024, county records show. It was one of five properties that DS Housing CCCRR-01 LP bought and sold in California under those new foreclosure auction rules before founder Matthew Regan terminated the company early last year, according to state records.
The transactions represent some of the nearly 1,000 distressed properties that a database maintained by the attorney general shows were offered at public auction but actually bought thereafter, under legislation designed to make it easier for lower-income people to buy and rent homes.
Senate Bill 1079 went into effect Jan. 1, 2021. It sought to increase the supply of affordable housing by giving tenants, advocates and nonprofits -- so-called eligible bidders -- up to 45 days after a foreclosure auction to outbid the winning bidder, even by just $1.
The idea was to keep professional and institutional investors from flipping properties and driving up the cost of housing. SB 1079 was supposed to be a temporary fix that would expire after five years.
Then in 2022, California enacted Assembly Bill 1837, tightening the rules on different types of eligible bidders, including nonprofits, tenants and buyers agreeing to restrict the property for affordable housing.
Under those stricter rules, nonprofits and their boards have to be based in California in order to qualify. And buyers restricting the properties for affordable housing must do so for at least 30 years and record it on the deed, among other things.
Limited liability companies could be eligible bidders provided they are wholly owned by nonprofits whose primary activities are "the development and preservation of affordable rental or homeownership housing in California."
And nonprofits are required to publicly disclose their annual revenue and spending and comply with myriad state and federal tax laws unrelated to California affordable-housing rules.
AB 1837 also extended the previous law to Jan. 1, 2031. And it authorized the attorney general, county counsel, city attorneys and district attorneys to enforce its provisions.
The Attorney General's Office reports some 950 homes across the state were purchased under the program, including dozens in San Diego County.
Although the attorney general records sales made under the program, state law doesn't require anyone to verify before the sales are made that bidders are actually eligible.
While most buyers in the attorney general's database appear to meet their obligations, others appear to have flouted them -- either by creating shell nonprofits to qualify as eligible bidders or by failing to restrict the deeds and record those restrictions to make sure the homes remain affordable.
The San Diego Union-Tribune identified in the state database at least four San Diego County properties whose deeds were not restricted as called for under the state law after outbidding the winners in foreclosure auctions. One of those is the house on Bottlebrush Court.
Since the law took effect, no charges have been filed by San Diego County prosecutors over purchases made under it or alleging fraudulent bids in foreclosure auctions, the District Attorney's Office said.
"We investigate reported real estate fraud cases and have successfully handled numerous prosecutions and jury trials resulting in convictions," a spokesperson said by email. "However, we have not handled cases specific to the foreclosure sale bidding process."
State prosecutors say they are aware of the potential for fraud and focused on enforcing the rules governing foreclosure auctions. But they declined to discuss any cases.
"This is an area our office is actively engaged in," the Attorney General's Office said in a statement. "However, to protect their integrity we are unable to comment on, even to confirm or deny, potential or ongoing investigations not already made public by our office."
The prosecutors' office did release a cease-and-desist order it sent two years ago to one organization that had purchased homes under the legislation. Additional cases may also be moving forward.
"The (order) we sent constitutes all the enforcement actions we are currently able to disclose," the Attorney General's Office told the Union-Tribune.
The two-page order was addressed to Vet Housing Initiative, a Sacramento nonprofit that bought at least nine homes in San Bernardino and Riverside counties under the new foreclosure rules, according to the attorney general's database of participating buyers.
As of August 2024, the veterans nonprofit is no longer permitted to do business in California because it failed to provide requested records to the attorney general.
"You are ordered to immediately cease and desist from all operations, including all solicitations for charitable purposes by any means," the Attorney General's Office said. "Violation of this order may subject you and your organization's directors and officers to contempt sanctions and other remedies."
The nonprofit's last acquisition was in April 2024, Attorney General's Office records show. Riverside County Assessor's Office documents show that the two-bedroom, two-bath condominium in San Jacinto sold in March 2025 for $240,000.
Americo Peralta, the Vet Housing Initiative chief executive, told regulators in his notice of appeal that he did not know his organization had failed to respond to multiple requests for records and other information sought by the attorney general.
"Documents were provided to our CPA for timely filing, and I only became aware that they had not been submitted when the cease-and-desist order appeared on the state website," he said in his notice of appeal.
Peralta said in a telephone interview that complying with all of the various rules -- both for acquiring properties and managing the nonprofit -- proved overwhelming.
"It was going fine in the beginning, but the problem was I've never started a nonprofit, and I didn't know how to do the bookkeeping and other paperwork," he said. "At the same time, I'm trying to get all the rehab going."
Peralta said only two of the houses Vet Housing Initiative purchased have been successfully rented to low-income veterans.
"The rest are sitting vacant and need repairs," he said. "They're not doing anything, and that's because of the cease-and-desist order and everything that comes along with it. At this point, I'm on the fence about seeing if we can get it going or if we should just file for bankruptcy."
It wasn't long after SB 1079, the initial legislation, was signed into law as the "Housing for Homeowners, Not Corporations Act" that investors and other real estate experts began finding loopholes.
In some cases, bidders claimed alliances with out-of-state charities to qualify as eligible bidders; in others, trustees encouraged auction participants to sign waivers declaring they would be owner-occupants of the properties up for auction, a later legislative analysis said.
By 2022, lawmakers were being bombarded with complaints that the rules were being abused.
Assemblymember Mia Bonta, the Oakland Democrat who is married to Attorney General Rob Bonta, introduced AB 1837, dubbed the "Homes in Community Hands Act," as cleanup legislation aimed at rooting out bad actors circumventing the earlier law.
The stricter rules went into effect three years ago, but they have not been a cure-all.
"The Assemblymember introduced AB 1837 to make housing more accessible for the folks who need it most and remains committed to working with her colleagues to accomplish that," her spokesperson said by email.
Ongoing abuse of the foreclosure auction rules "seems to speak to the larger trend of large corporations exploiting loopholes and driving up costs for everyday Californians," he said.
Many of the distressed properties were sold to bidders who live in the foreclosed homes or rent them to lower-income tenants. But the Union-Tribune identified in the attorney general's database and in other state, county and other public records more than 100 sales to for-profit companies, limited partnerships and startup nonprofits organized by longtime real estate professionals.
By far the most active eligible bidder listed on the attorney general's database of participating buyers is Four Corners Housing LLC. The company bought and sold 61 properties across California in 2023 and 2024, database records show.
Four Corners Housing was launched early in 2023 by Regan, the same investor whose company DS Housing CCCRR-01 LP collected a sizable profit after selling the Bottlebrush Court home it acquired months earlier.
Regan, who lives in Orange County, did not respond to multiple requests for comment for this article.
According to a sworn declaration Regan filed in an unrelated San Diego Superior Court lawsuit, Four Corners Housing LLC is wholly owned by Clear Preservation Housing Foundation, a tax-exempt nonprofit organization he opened in January 2023, weeks before establishing his LLC.
Regan told the attorney general, as part of the process of certifying his organization with the state, that the nonprofit collected just $1,750 in revenue in 2023 and held the same amount in total assets at the end of the year.
Over the same 12 months, Four Corners Housing LLC bought 24 separate properties, the Attorney General's database shows.
The individual purchase prices of those homes are not posted on the state list of reported residential foreclosure sales, but real estate industry websites show they sold for a combined $8,990,000 in the months after Four Corners Housing LLC acquired the properties.
The Clear Preservation Housing Foundation, which lists Regan and his wife as the only board members, received a delinquency notice from the Attorney General's Office last August for failing to submit required documents or fees but is now listed as current with the state agency responsible for regulating charities.
The foundation's federal tax filing for 2023 -- its first year in existence -- shows $12,285 in total revenue against $8,246 in expenses. It also reported $5.1 million in total assets and $5.1 million in overall liabilities, for a net fund balance of just over $9,200.
In October 2024, a two-bedroom, one-bath home in the Valencia Park neighborhood of San Diego was put up for auction in a foreclosure sale by a trustee that was owed just over $182,000, county records show.
The winning bid was $207,000, county property records show. But on the same day the auction closed, Regan and his Four Corners Housing LLC filed a declaration in county property records stating his intention as an eligible bidder to submit a higher bid.
Two months later the company acquired the home for $265,000, property records show.
It was renovated and listed for sale at $650,000 late last year. "Great opportunity for a beautifully remodeled home on a large lot at an amazing price," the listing agent wrote online.
The property is now in escrow with a new buyer.
Regan established an earlier nonprofit entity when he was acquiring properties through his former company, DS Housing CCCRR-01 LP, state and federal records show.
The Dove Street Housing Foundation, which Regan opened as the CV Neighborhood Foundation in 2021, was dissolved in 2025, attorney general records show. In a letter explaining where the last of its charitable assets went, he told the attorney general he gave its last holdings -- just over $9,900 -- to the Habitat for Humanity chapter in Orange County.
Lenders have been taking foreclosure actions against mortgage borrowers at a sharply growing pace in recent months -- a trend analysts have blamed on the growing burden borrowers face from higher taxes, insurance premiums and homeowner association fees, among other costs.
The number of nationwide filings over the first quarter of 2026, which ended March 31, was just under 119,000 -- up 6% over the last three months of 2025, and up more than 25% over the same period in 2025, the real estate data analyst Attom reported last month.
It was the highest number of foreclosure actions since the early months of the COVID-19 pandemic.
In California, the incentive program that allows certain types of eligible bidders to outbid buyers of distressed properties for up to 45 days after foreclosure auctions close has worked for many buyers.
Tiffany Comandatore was able to purchase and move into her San Marcos home after the property was put up for sale by the lender in late 2023. But she said the laws that set up the program have been badly abused, and no one is being held accountable.
"SB 1079 was designed to stop institutional investors from buying up foreclosures," she said. "Instead, private investors appear to be using nonprofit shells to access priority bidding, then flipping at market value.
"AB 1837 requires a 30-year affordability covenant on these purchases -- none are being recorded, and the AG's office has not enforced it despite complaints," she added.
Lawmakers have been getting an earful from would-be program participants, and from many of the community groups that pushed for the legislation.
Maddie Ribble of the California Community Land Trust Network, a Berkeley nonprofit that helped pass SB 1079 and AB 1837, said the laws were designed to prevent institutional investors from capitalizing on foreclosures like so many did during the 2008 housing crisis.
But "lack of funding to support 1079 acquisitions by our members and other community-based nonprofits has been a barrier to realizing the full potential of the law," he said. "And we have been aware of reports of bad actors exploiting the law for private gain, contrary to the intent of the legislation."
The complaints grew so common and frequent that last year Assemblymember Phillip Chen, R-Brea, introduced a bill that would have further tightened the rules for foreclosure auctions.
Among other changes, AB 1158 would have required eligible bidders to pay a 1.2% reimbursement fee to would-be buyers who were outbid. It also would have granted the auction's high bidder the right to sue post-sale bidders.
"These changes aim to restore integrity and transparency to the foreclosure sale process, deter abuse of the SB 1079 framework and protect borrower equity by encouraging competitive, fair-market bidding," an analysis by the Assembly Judiciary Committee said.
The Chen legislation died in the Assembly Appropriations Committee last spring, largely due to concerns over costs related to the right of action granted to high bidders whose purchases were voided by nonprofits.
But a similar bill, AB 1957, was introduced earlier this year by Los Angeles-area Democrat Blanca Pacheco, keeping the 1.2% reimbursement requirement but omitting the right-to-sue provision.
"While the law's purpose was to prevent displacement and promote equitable housing opportunities, its implementation has been undermined by fraudulent actors exploiting loose eligibility requirements and procedural delays," the bill summary said.
The Pacheco-sponsored legislation passed the Assembly Appropriations Committee earlier this month.
It was amended to specify that trustees may rely on affidavits from eligible bidders rather than verify their declarations of eligibility, and to ensure that the properties sold through the program have not been red-tagged and hold valid certificates of occupancy.