Sciarratta v. U.S. Bank National Association
Facts: A homeowner purchases a property and obtains a mortgage secured by a trust deed on the property. The homeowner later goes into default. The mortgage holder assigns the trust deed to a successor mortgage holder and concurrently records a Notice of Default (NOD). The original mortgage holder then records a Notice of Trustee’s Sale (NOTS) and assigns the trust deed to a third mortgage holder. The third mortgage holder nonjudicially forecloses on the property.
Claim: The homeowner seeks to recover money losses and set aside the foreclosure, claiming the foreclosure was wrongful since the trust deed belonged to the successor mortgage holder at the time of the foreclosure sale, and thus the assignment from the original mortgage holder to the third mortgage holder is void.
Counterclaim: The mortgage holder claims the homeowner may not challenge the validity of the foreclosure since they have not alleged any harm which is an essential element of a wrongful foreclosure claim.
Holding: A California court of appeals holds the homeowner may challenge the validity of the foreclosure since an allegation of a void assignment itself is an allegation of harm and the homeowner is not required to allege additional harm in order to challenge a foreclosure as wrongful. [Sciarratta v. U.S. Bank National Association (May 18, 2016) __CA4th__]
Editor’s note — This ruling further clarifies the Supreme Court’s Yvanova v. New Century Mortgage Corporation decision which establishes an allegation of a void trust deed assignment is sufficient to challenge a foreclosure as wrongful as the void assignment itself qualifies as prejudice or harm.