Conception Hermosillo v. New York Community Bank
75020-8
| Wash. Ct. App. | Apr 24, 2017Background
- In 2005 Hermosillo borrowed $212,000 and executed a promissory note secured by a deed of trust; the note later came into NYCB's possession after AmTrust's failure and FDIC transfer.
- Hermosillo entered a loan modification in April 2012 but defaulted in June 2012.
- MERS recorded an assignment of the deed of trust to NYCB in October 2012; NYCB appointed Quality Loan Service Corp. as successor trustee in March 2013.
- Quality issued a notice of default and a notice of trustee's sale in 2013; an August 2013 sale was discontinued. A new notice of trustee's sale was recorded in April 2015 without a new notice of default.
- Foreclosure sale occurred; Hermosillo sued NYCB and Quality under the Washington Consumer Protection Act (CPA). Trial court granted summary judgment for NYCB and Quality; Hermosillo appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether NYCB had authority to foreclose | NYCB lacked authority because the deed of trust does not automatically follow the note and MERS never held a beneficial interest to assign | NYCB, as holder/possessor of the original note, had the right to foreclose; assignment from MERS unnecessary | NYCB had authority to foreclose as note holder; no factual dispute on that issue |
| Whether the MERS assignment (or its invalidity) prevented foreclosure | MERS assignment was ineffective, so foreclosure was wrongful | Invalidity of the MERS assignment did not impair NYCB's right because possession of the note controls | Invalid MERS assignment did not affect NYCB's foreclosure authority |
| Whether Quality complied with Deeds of Trust Act notice rules before resale | After discontinuing the first sale, Quality had to issue a new notice of default before issuing a second notice of trustee's sale | Under precedent, only a new notice of trustee's sale was required after the original sale date expired; a new notice of default is unnecessary | Quality complied: reissued notice of trustee's sale satisfied statute; original default notice remained effective |
| Whether respondents’ conduct was an "unfair or deceptive act" under the CPA | Foreclosure and alleged statutory violations constituted unfair/deceptive acts supporting CPA relief | Conduct was lawful (note-holder foreclosure) and DTA notice obligations were satisfied, so no unfair or deceptive act occurred | Because no unfair or deceptive act shown, CPA claim fails and summary judgment affirmed |
Key Cases Cited
- Brown v. Dep't of Commerce, 184 Wn.2d 509 (possession of the promissory note determines right to foreclose)
- Albice v. Premier Mortgage Servs. of Wash., Inc., 174 Wn.2d 560 (statutory requirement regarding notice of trustee's sale when original sale date expires)
- Leahy v. Quality Loan Serv. Corp., 190 Wn. App. 1 (requiring a new notice of trustee's sale after original date expires does not require a new notice of default)
- Lyons v. U.S. Bank Nat'l Ass'n, 181 Wn.2d 775 (DTA violations can support CPA claims but must satisfy CPA elements)
- Bain v. Metro. Mortg. Grp. Inc., 175 Wn.2d 83 (confirmation that security follows the note under Washington law)
- Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 105 Wn.2d 778 (elements and analysis framework for CPA claims)