As Moreno Valley foreclosure defense lawyers, we've seen many, many cases against Countrywide, the now-disgraced home loan company that was later purchased by Bank of America. Countrywide was especially active in the Inland Empire here in southern California, and today, many of those neighborhoods show the ill effects of overly broad or even predatory loans. So we were interested to see a state appeals court decision in favor of Countrywide coming out of Riverside Superior Court. In Robinson et al. v. Countrywide Home Loans, the plaintiffs alleged wrongful foreclosure, unfair business practices and other wrongdoing by Countrywide and MERS. The court sustained demurrers on most counts and found for the defendants on the fifth, and the Fourth District upheld that decision.
The Robinsons took out a $380,000 home loan from SMBC. MERS was beneficiary to the deed of trust, and Countrywide was later made the servicer. It notified the Robinsons in December 2008 and January 2009 that the loan was delinquent, and their attorney wrote to Countrywide requesting a beneficiary statement, a payoff demand and any documents involving a transfer. On February 11, ReconTrust, as agent for MERS, recorded a notice of default and election to sell the property. On February 27, Countrywide notified the Robinsons that it had referred the case to its foreclosure management team. It never identified the current beneficiary of the deed of trust, despite further requests. The Robinsons alleged that SMBC never assigned the note to MERS or authorized MERS to assign it elsewhere. Therefore, they said, the foreclosing entity did not have the right to foreclose, and because the loan had been sold so many times, it was impossible to identify the correct entity.
The trial court sustained demurrers to counts for wrongful foreclosure, declaratory relief, quiet title and unfair business practices. The plaintiffs then asked to voluntarily dismiss without prejudice a final count for violations of California's civil code, but the trial court instead entered judgment for the defendants. The plaintiffs appealed.
The Fourth District started by noting that the wrongful foreclosure and declaratory relief counts hinged on the argument that MERS had no legal authority to start the foreclosure proceeding. The court found that this issue was raised too early. Under a recent California appellate decision, Gomes v. Countrywide, the court concluded that there is no preemptive right to challenge standing to foreclose. Thus, it said, the trial court was correct to sustain demurrers on those counts. Furthermore, the court said, even if there were such a claim, the Robinsons' complaint is based on foreclosure proceedings initiated by ReconTrust, not MERS or Countrywide, on behalf of an entity other than MERS. Thus, no facts support an action against MERS or Countrywide. Thus, the court upheld the trial court's decisions.
Our Mission Viejo foreclosure defense attorneys hope a higher court takes up the issue of preemptive challenges to standing to foreclose. A footnote to the opinion notes that a plaintiff wishing to challenge standing may ask to set a sale aside or enjoin the sale. Unfortunately, those take place after a sale, which means the buyer would already have the right to go to court to evict the family foreclosed on. Most likely, the damage to the borrowers' credit created by foreclosure, which is considerable, would not be repaired easily. As Temecula foreclosure defense lawyers, we believe borrowers challenging standing should be able to do it before all of this takes place, while they are still in possession of the home, rather than waiting for a court to wrongly take it away and hoping for relief.
Howard Law, P.C., represents clients across California who are fighting an unfair or avoidable foreclosure or a predatory loan. To learn more or set up a consultation, call us today at 1-800-872-5925 or send us a message through our website.