Tuesday, February 19, 2019
Court of Appeal:
By a MetNews Staff Writer
The Fourth District Court of Appeal has held that a foreclosure sale was valid even if the beneficial interest in the property was held at the time of the sale by a party other that the one claiming to be the beneficiary.
Justice Raymond Ikola wrote the opinion, filed Thursday and not certified for publication.
In a case with an unusual fact-situation, Ikola announced that it is not required that the purported beneficiary establish its actual status as such for a trustee sale to have legal effect.
The borrower, Nancy M. Horner, in 2005 was loaned $825,000 on her Huntington Beach home, secured by a deed of trust with a power to sell upon default in making payments. Mortgage Electronic Registration Systems, Inc. was the beneficiary under the deed of trust.
It assigned all beneficial interest under the deed of trust in 2011 to Aurora Loan Services, LLC; Aurora, a year later, assigned its interest to Nationstar; through a slip-up, Aurora on Dec. 11, 2015 assigned its now-nonexistent interest to BONY.
Borrower in Arrears
Horner had not been making payments, and by the time of the purported December 2015 assignment, foreclosure proceedings were in progress. The trustee followed the procedures set forth in Civil Code §2924: recording a notice of default and, after at least three months, publishing, posting and mailing a notice as to the time and place of the sale, at least 20 days before that sale.
The sale was conducted on Dec. 30, 2015 and BONY purchased the property.
On Feb. 4, 2016, Nationstar assigned its interest under the deed of trust to BONY which, Ikola observed, “was an attempt to correct the irregularity” in the form of BONY not having possessed that interest at the time of the trustee sale.
Orange Superior Court Judge Robert James Moss in 2017 awarded summary judgment to BONY in its unlawful detainer action against Horner. She appealed, arguing that BONY “was not the beneficiary of the deed of trust on the date of the sale,” rendering the sale void.
Explaining the affirmance, Ikola observed that the trustee adhered to the procedures set forth in §2924. He declared:
“Defendant… cites no authority, nor has our research uncovered any, which suggests section 2924 requires BONY to prove the validity of its assignment.
“In any event, the validity of the assignment to BONY is not dispositive because there is evidence Nationstar authorized the foreclosure sale.
“Here, a substituted trustee initiated the foreclosure process, and Nationstar’s declaration stated both Nationstar and BONY authorized the trustee to ‘commence, conduct, and conclude’ the foreclosure sale. Defendant did not present any contrary evidence. Thus, if the December 2015 assignment was void and BONY was not the beneficiary of the deed of trust before the foreclosure sale, Nationstar was the beneficiary and authorized the sale. If the December 2015 assignment was valid, BONY was the beneficiary and authorized the sale. In either scenario, the foreclosure sale was initiated by a trustee authorized by the beneficiary of the deed of trust.”
The jurist went on to say:
“While the validity of BONY’s assignment is not dispositive, we also note we disagree with defendant’s attempt to challenge the assignment within the context of section 2924….[I]f borrowers could challenge title in the way defendant seeks to do, they could delay unlawful detainer actions in the same way courts have held improper in pre-foreclosure cases.”
The case is The Bank of New York Mellon v. Horner, G055500.
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