Herrera v. Federal National Mortgage Ass'n
205 Cal. App. 4th 1495
| Cal. Ct. App. | 2012Background
- Plaintiffs defaulted on a home loan; Fannie Mae purchased the property at a nonjudicial foreclosure sale.
- The DOT named MERS as beneficiary (nominee for lender) and granted MERS broad rights, including foreclose and assign the DOT and note.
- IndyMac’s assets were acquired by the FDIC and later OneWest; OneWest assigned the DOT and note to Fannie Mae.
- Foreclosure proceedings proceeded; plaintiffs alleged defects in MERS’s authority and the assignments.
- SAC attached DOT, note, assignments, notice of default, substitution of trustee, and trustee’s deed; demurrer was sustained without leave to amend against all claims, including sections 2932.5 and the fifth and sixth causes of action.
- Court concluded no abuse of discretion in denying leave to amend for fifth and sixth causes of action and held section 2932.5 inapplicable to DOTs; affirmed dismissal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of fifth and sixth causes of action | MERS lacked authority to assign DOT/note to OneWest; FDIC/IndyMac Federal lacked agency with MERS | MERS had authority as nominee; DOT条 grants power to foreclose | No abuse; assignments valid; sale upheld |
| Leave to amend | Could amend to allege invalid assignments | No potentially effective amendment shown | No abuse; no amendment capable of curing defects |
| Section 2932.5 applicability | Foreclosure void if assignment not recorded as required | Section 2932.5 does not apply to deeds of trust; not required here | Inapplicable; trial court not wrong to demur without leave to amend |
| Substitution of trustee validity | Substitution by OneWest invalid if DOT assignment to OneWest void | OneWest had authority as successor/assignee or via MERS; substitution valid | No abuse; substitution valid and foreclosure regular |
Key Cases Cited
- Fontenot v. Wells Fargo Bank, N.A., 198 Cal.App.4th 256 (Cal. Ct. App. 2011) (MERS authority to foreclose and assign; DOT as nominee; no need for principal authorization at initiation)
- Gomes v. Countrywide Home Loans, Inc., 192 Cal.App.4th 1149 (Cal. Ct. App. 2011) (MERS authority to initiate foreclosure not required to be established by principal at initiation)
- Calvo v. HSBC Bank USA, N.A., 199 Cal.App.4th 118 (Cal. Ct. App. 2011) (Section 2932.5 does not apply to deeds of trust; non-judicial foreclosures governed by §2924)
- Melendrez v. D&I Investment, Inc., 127 Cal.App.4th 1238 (Cal. Ct. App. 2005) (Presumption of regularity for nonjudicial foreclosure; burden on challenger to prove irregularity)
- CAMSI IV v. Hunter Technology Corp., 230 Cal.App.3d 1525 (Cal. Ct. App. 1991) (Abuse of discretion standard for denial of leave to amend; potentially effective amendment required)