The California mortgage community is abuzz with comment and speculation following the February 18, 2016 decision by the California Supreme Court in Yvanova v. New Century Mortgage Corp., 365 P.3d 845 (Cal. 2016), in which the Court held that, at least in some circumstances, a borrower who had suffered a nonjudicial foreclosure had standing to sue for wrongful foreclosure based on an allegedly void assignment of the mortgage. In at least one news article published by the American Bar Association on the heels of the decision, a California law professor was quoted as saying that the Yvanova decision could “open the courthouse doors to people in Yvanova’s situation.”
Yvanova Holding Strengthened, Some Say, By Subsequent Sciarratta Decision
Indeed, that Yvanova might offer borrowers a new weapon to fight foreclosures appeared buttressed by a decision out of California’s Fourth Appellate District some three months later. In that case, Sciarratta v. U.S. Bank Nat’l Ass’n, 2016 Cal. App. LEXIS 399 (May 18, 2016), the appellate court held that foreclosure by an entity with no power to foreclose is, by itself, the tort of wrongful foreclosure.
Is Yvanova Really an “Open Sesame” for California’s Courthouse Doors?
Are borrowers’ rights advocates correct? Does the Yvanova decision really amount to “Open Sesame” when it comes to liability claims filed against mortgage lenders and servicers for wrongful foreclosure in California? Put another way: Is wrongful foreclosure law substantially different after Yvanova?
Many Unanswered Questions
Some mortgage law experts allow that while Yvanova may have opened a door, once one runs through the door, all you’re left with is a dark cave. That is because so many questions were left unanswered. The Yvanova court admits as much, indicating its decision is “a narrow one.” Here are just a few of the issues left hanging by the Court’s February decision:
• In terms of mortgage assignments, what constitutes a void assignment vs. a voidable assignment?
• Does an assignment need to be recorded to effect the transfer of a loan?
• What legal difference does it make if a mortgage loan is assigned considerably after the original closing date?
• How did New Century’s 2007 bankruptcy affect, if at all, the alleged assignment of the Yvanova mortgage?
• What statute of limitations applies to “Yvanova”-like causes of action?
• Does Yvanova apply to pre-foreclosure claims?
• Must a borrower tender the full amount of the loan in order to set aside a wrongful foreclosure? (Language in Yvanova seems to say tender rules still apply.)
• Assuming that a bare allegation that the purported assignment was void is insufficient to state a cause of action, what additional facts must be alleged?
Banks, Mortgage Lenders, and Servicers Should Review Internal Procedures
While the Yvanova decision may not open the floodgates of wrongful foreclosure litigation in the way that some alleged experts are saying – or, perhaps hoping – one thing is really clear: Real estate closing documents, assignment documents, and mortgage servicing documents are being put under the legal microscope. Are you prepared? The best, first step is the retention of experienced, knowledgeable attorneys to advise you. For years now, CKB VENNA LLP has represented lenders, mortgage companies, mortgage servicers, and others in foreclosures and other types of real estate disputes. Our team understands the complexity of the issues and stands ready to represent you aggressively. We have offices in Rancho Cucamonga, San Bernardino, and Los Angeles. Contact us by telephone at 909-980-1040, or complete our online form.