In Re Salazar
448 B.R. 814
| Bankr. S.D. Cal. | 2011Background
- Accredited Home Lenders, Inc. loaned Salazar funds in 2005 secured by his Calexico residence; Deed of Trust designated MERS as nominal beneficiary; Foreclosure conducted December 7, 2009 with Trustee's Deed recorded December 14, 2009 identifying U.S. Bank as foreclosing beneficiary; Salazar challenged the foreclosure in state court while US Bank sought relief from stay to proceed with unlawful detainer; Salazar filed Chapter 13 to reinstate the loan and cure default; Court held Salazar has an equitable title protected by the stay despite US Bank’s standing as record title owner.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to seek stay relief | Salazar | US Bank | US Bank has standing as record title owner |
| Salazar’s property interest after foreclosure | Salazar | US Bank | Salazar retains equitable title; stay protects this interest |
| Civil Code 2932.5 applies to DOTs | US Bank | Civil Code 2932.5 does not apply to DOTs/MERS | 2932.5 applies to DOT; recording required regardless of MERS |
| MERS as an alternative to statutory law | Salazar | US Bank | MERS cannot bypass statutory foreclosure requirements; recording required |
Key Cases Cited
- Bank of Italy Nat. Trust & Sav. Assn. v. Bentley, 217 Cal. 644 (1933) (title distinction obsolete; foreclosure protected under statutory framework)
- Gomes v. Countrywide Home Loans, Inc., 192 Cal.App.4th 1149 (2011) (recordation and authority issues in foreclosures; testing MERS authority)
- Cathay Bank v. Lee, 14 Cal.App.4th 1533 (1993) (waiver of borrower protections must be knowing and intelligent)
- Dimock v. Emerald Properties, 81 Cal.App.4th 868 (2000) (foreclosure validity impacts title and remedies)
- Bank of America, N.A. v. La Jolla Group II, 129 Cal.App.4th 706 (2005) (recording of assignments; statutory protections in foreclosure)