Tuesday, June 10, 2014
C.A. Says Nonjudicial Foreclosure Sale Cannot Be Enjoined
By KENNETH OFGANG, Staff Writer
California’s nonjudicial foreclosure statutes preclude a defaulting borrower from suing to block the sale of his property, the Court of Appeal for this district ruled yesterday.
Presiding Justice Arthur Gilbert, writing for Div. Six, said a San Luis Obispo Superior Court judge correctly denied Saeed Keshtgar’s bid for an injunction blocking the sale of his home.
His complaint alleged that Keshtgar borrowed over $900,000 from Resource Lenders, Inc. to buy the home in 2005; that Mortgage Electronic Resource Systems, Inc., was the nominal beneficiary on the deed of trust; that the deed of trust was later assigned to U.S. Bank, and that a purported assistant secretary of MERS executed the assignment.
In fact, the complaint went on to say, the person who executed the assignment had no legal authority to do so, nor had any responsible official of Resource Lenders or MERS authorized the foreclosure, nor had U.S. Bank acquired a legal right to do so. The complaint acknowledged that the loan had been “non-performing” since before the date of the assignment.
Judge Charles Crandall was correct in sustaining U.S. Bank’s demurrer, Gilbert wrote.
“One would think, indeed hope, that Gomes [v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149] would put an end to cases like the instant one,” the presiding justice wrote. “For some hopefuls, Glaski v. Bank of America, N.A. (2013) 218 Cal.App.4th 1079, holds out the tantalizing prospect of a preemptive action to challenge a foreclosure. It does not. The yearning for a holding does not create one.”
Gomes held that a defaulting borrower may not bring a declaratory action challenging the noteholder’s right to initiate a nonjudicial foreclosure through a nominee such as MERS. Such an action would be contrary to the Legislature’s intent in enacting a comprehensive set of rules for nonjudicial foreclosures, the court held in that case.
Glaski, however, held that a homeowner, who alleged that the foreclosure and sale of his home were invalid because the attempted transfer of the loan into a securitized trust was void and thus the foreclosing entity was not the true owner of the loan, stated a cause of action.
Gilbert distinguished the cases, noting that Glaski involved a suit brought post-foreclosure and opining that “Glaski reads Gomes too narrowly.”
He cited Jenkins v. JP Morgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497, which held that a borrower—whose property was the subject of a foreclosure sale that had been postponed and not rescheduled—could not bring a declaratory action to challenge the lender’s standing to initiate a nonjudicial foreclosure.
“Gomes holds that there is no judicial action to challenge the authority of the person initiating the foreclosure process….As Jenkins shows, that applies whether the challenge is to the lender’s nominee, or as here, a transferee.”
He also criticized the Glaski court’s ruling that a borrower has standing to challenge an assignment. That holding was based on federal court decisions and rulings in other states, not on California authority, he said.
The case is Keshtgar v. U.S. Bank, N.A., B246193.
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