Facts: A homeowner obtains a mortgage secured by a trust deed on their property which is subsequently assigned to a new mortgage holder. The owner later defaults on the mortgage and receives a Notice of Default (NOD) from a substitute trustee named on the notice. However, the new mortgage holder does not execute a substitution formally naming the trustee delivering the NOD as the substitute trustee until several weeks later. The owner fails to tender the required amounts and the property is sold at a nonjudicial foreclosure sale.
Claim: The owner seeks to nullify the foreclosure sale as void, claiming the new mortgage holder wrongfully foreclosed since the substitute trustee was not formally named as trustee when they delivered the NOD and did not have authority to commence foreclosure, thus breaking the chain of title.
Counter claim: The new mortgage holder claims the foreclosure sale is valid since the timing of the formal substitution of the trustee did not affect the trustee’s compliance with required foreclosure procedures or deprive the owner of the opportunity to cure the default and avoid foreclosure.
Holding: A California court of appeals holds the foreclosure sale was not void since the delayed substitution of the trustee was not a material defect that impaired the owner’s ability to cure the default and prevent foreclosure. [Ram v. OneWest Bank (February 6, 2015)_CA4th_]
It’s not as simple as that. Many people were intentionally lured into default by the banks. The trustees are in cahoots with the banks. They’re supposed to be impartial 3rd parties but they always side against homeowners. In non-judicial states that’s a problem. Especially in California with the enactment of SB 1638.
Talk about dropping a truth bomb. Wait until that argument starts hitting the courts. I read SB1638 and I can see the problems it imposes. The only reason non-judicial foreclosures are allowed is due to having a neutral third party. The Foreclosure Trustees are supposed to be that party, with fiduciary responsibilities to both parties. If they always side with the banks then there’s a problem.
Texas non-judicial foreclosure sale void after borrower advises Substitute Trustee he didn’t comply with the statutory laws. Even though Texas is a lender friendly state, they must do their due diligence.