Kan v. Guild Mortgage CA2/2
178 Cal. Rptr. 3d 745
Cal. Ct. App.2014Background
- Kan’s property is in default and he sues to quiet title, arguing securitization of the loan invalidates foreclosures; demurrer sustained without leave to amend.
- Two notes secured by deeds of trust were executed in 2007, naming Guild Mortgage as lender, Guild Administration as trustee, and MERS as beneficiary/nominee.
- Kan recorded attempts to modify the deeds to reflect zero debt and later reconveyances, and then deeded the property to the PCYA Trust.
- MERS substituted Recontrust as trustee and assigned the first deed to BONY as trustee for CWALT; a notice of default was recorded and a trustee’s sale was contemplated.
- The second deed was assigned to BofA; Kan, as PCYA trustee, filed a 2012 quiet title action alleging improper securitization and noncompliance with the pooling and servicing agreement; BONY, BofA, and BANA intervened; demurrer sustained; judgment for respondents.
- The court rejects the preforeclosure quiet-title theory, citing Jenkins and Gomes to uphold nonjudicial foreclosure scheme and rejecting Glaski-style standing to challenge securitization in a preforeclosure action.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether preforeclosure quiet-title claims based on securitization can proceed. | Kan argues improper securitization voids foreclosures. | Jenkins/Gomes foreclose preemptive challenges to authority. | No; demurrer affirmed; no viable preforeclosure quiet-title claim. |
| Whether Glaski should govern preforeclosure challenges to securitization. | Kan urges Glaski as controlling. | Glaski not applicable to preforeclosure actions. | Glaski not adopted; Jenkins controls. |
| Whether plaintiffs have standing to challenge assignment/securitization in a preforeclosure action. | Kan contends standing to challenge transfer. | Prejudices addressed by nonjudicial scheme; no standing to challenge in preforeclosure. | Not stated as independent basis; court relied on Jenkins to sustain demurrer. |
Key Cases Cited
- Jenkins v. JPMorgan Chase Bank, N.A., 216 Cal.App.4th 497 (Cal. Ct. App. 2013) (preemptive action to challenge foreclosing entity not authorized by nonjudicial scheme; no standing to halt foreclosure.)
- Gomes v. Countrywide Home Loans, Inc., 192 Cal.App.4th 1149 (Cal. Ct. App. 2011) (nonjudicial foreclosure aims for quick, efficient remedy; preemptive challenges discouraged.)
- Glaski v. Bank of America, 218 Cal.App.4th 1079 (Cal. Ct. App. 2013) (postclosing transfer challenged; standing to contest assignment discussed (but not adopted here).)
- Keshtgar v. U.S. Bank, N.A., 226 Cal.App.4th 1201 (Cal. Ct. App. 2014) (rejects Glaski-like standing for preforeclosure actions.)
- Yvanova v. New Century Mortgage Corp., 226 Cal.App.4th 495 (Cal. Ct. App. 2014) (depublished; addressed standing in wrongful foreclosure (context noted))
- Calvo v. HSBC Bank USA, N.A., 199 Cal.App.4th 118 (Cal. Ct. App. 2011) (assignment of deed of trust not required to be recorded; effect on borrower obligations.)
- Fontenot v. Wells Fargo Bank, N.A., 198 Cal.App.4th 256 (Cal. Ct. App. 2011) (assignment validity and effect on securitization challenges.)