Facts: A property owner obtained a loan secured by a trust deed on their property. The lender transferred its interest in the loan and its foreclosure rights to a trustee as part of a pooling and servicing agreement (PSA). The PSA appointed a loan servicer for the pool and assigned the loan servicer foreclosure authority. The owner defaulted on the loan and the loan servicer filed a judicial foreclosure action in the loan servicer’s name.
Claim: The property owner sought to prevent judicial foreclosure, claiming the loan servicer may not file a judicial foreclosure action in the loan servicer’s name since judicial foreclosure can only be commenced by the beneficiary or the trustee.
Counterclaim: The loan servicer claimed it may file a judicial foreclosure action in its name since the trustee assigned the loan servicer foreclosure authority under the PSA.
Holding: A California court of appeals held the loan servicer may pursue judicial foreclosure in its name as the trustee assigned the loan servicer foreclosure authority under the PSA. [Arabia v. Home Loan Servicing, L.P. (2012) 208 CA4th 462]
