SB Auto Service, Inc. v. Elite Creative LLC, et al.

Court: LASC, Northwest District (Van Nuys)

Filed: May 27, 2026

Causes of Action: Twelve. Wrongful foreclosure, set aside the trustee’s sale, cancellation of instruments, quiet title, declaratory relief, fraud, negligent misrepresentation, breach of fiduciary duty/constructive fraud, accounting, money had and received/unjust enrichment, unfair business practices, and injunctive relief.

The borrower sued the two lenders, the loan broker, the foreclosure trustee, the loan servicer, and several individuals alleged to be agents of the broker.

In July 2024, the borrower took out a $760,000 hard-money loan to pay off a prior matured loan that was already in foreclosure. The borrower alleges the broker represented the loan would be a temporary bridge to a replacement refinance with better terms and cash-out proceeds. The settlement statement shows the proceeds paid off the prior loan plus closing costs, leaving the borrower a net refund of $801.82.

On January 15, 2025, the foreclosure trustee recorded a Notice of Default. It states the first missed payment was October 1, 2024, with $37,957.40 past due.

In August 2025, the borrower paid $150,000 in connection with the sale of a separate property. The borrower alleges this payment was demanded to finalize the refinance and protect the property, and that it was never properly accounted for.

The foreclosure sale went forward on November 19, 2025 at a credit bid of $800,000.

The borrower seeks to set aside the sale and obtain a full accounting of how the $150,000 was applied.

🔒 Paid below: the takeaway and three lessons for lenders.

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Brown v. Abra Lending, Inc., et al.

Court: LASC, Central District

Filed: May 13, 2026

Causes of Action: Rescission of releases and declaratory relief, breach of written contract, breach of the implied covenant of good faith and fair dealing, unfair business practices, negligence, conversion and money had and received, and intentional infliction of emotional distress.

The borrower sued his lender, the loan broker and initial servicer, two affiliated investment entities alleged to be alter egos, and the foreclosure trustee.

The loan was $1,900,000, interest-only at 10%, $15,833.33 a month beginning March 2022, with a balloon due February 1, 2025. The collateral consisted of two Compton properties with 17 rental units.

The borrower alleges he made every monthly payment from March 2022 through August 2024 except one, in November 2023 while he was traveling overseas, and that he resumed in December and kept paying. He alleges the lender’s own loan statement showed a single missed installment of $15,833.33, though he does not attach that statement to the complaint.

The trustee recorded a Notice of Default on March 19, 2024 claiming $64,200.27 in arrears, allegedly eight days after the borrower’s March payment posted. A Notice of Trustee’s Sale followed in August 2024, setting a September 4 sale.

Facing that sale, the borrower alleges that he was forced to sign a First Forbearance Agreement, then a Second Forbearance Agreement, then two note modifications. Three of those documents, the second forbearance and both modifications, contained broad general releases of the lender, waiving all claims, known and unknown. The lender voluntarily rescinded the Notice of Default in December 2024 after the borrower completed the required repairs, paid property taxes, and provided proof of insurance. The borrower refinanced and paid the loan off on September 9, 2025.

He now seeks rescission of each release, the allegedly improper default interest, late charges and fees, the cost of the new loan, and attorney’s fees.

So how does a single missed payment of $15,833.33 turn into a $64,200.27 default? The math is the whole case, and once you see what else the lender piled on, part of it looks an awful lot like an unenforceable penalty.

Below: where the rest of that number came from, why the borrower’s clever way out may not open the door he thinks it does, and the four moves that would have kept this lender out of court.

🔒 Paid below: the takeaway and the lessons for lenders.

The Takeaway

Start with the arrears, because they don’t add up. The borrower alleges the lender’s own loan statement showed one missed payment of $15,833.33, though he does not attach that statement to the complaint. The recorded Notice of Default claimed $64,200.27. If the borrower’s allegation about the statement is accurate, that is roughly $48,000 between what he says the records support and what the foreclosure was built on, and he says he flagged it and got nowhere. A foreclosure resting on a number the lender’s own records contradict is a wrongful-foreclosure claim waiting to happen.

Separately, the complaint points to two other charges, and if the borrower’s numbers are accurate, both are a problem.

First, default interest. The borrower alleges the second forbearance’s own exhibit computed $71,250 in default interest, the 5% default premium applied to the full $1,900,000 principal for nine months of 2024. The loan did not mature until February 1, 2025. A lender cannot charge a default rate against the entire loan balance, before the loan has come due, because of a missed payment or a non-monetary default. That is a penalty, not compensation for a loss. The default rate has its place, but not run against the whole loan before it matures.

Second, the late charges. The note set a late charge of 10% of the overdue payment, $1,583.33, then the lender, in the forbearance agreement’s outstanding balance statement, layered a separate compounding formula on top. That is two late-charge mechanisms aimed at the same default. The borrower attached an exhibit to the complaint showing that the lender computed the late charges to be $36,416.59. A late charge compensates for one late payment, once. Charging a fresh late charge every month and compounding it on top is a double charge, and that is not allowed.

Then there is the rescission theory, which is the clever part. The borrower offers to give back everything he received under the releases. The trouble is what he received was time. Three forbearances and modifications bought him months of delay before the sale. How do you give back time? Rescission generally requires putting the other side back where it started. The borrower’s way around it is the allegation of duress and unconscionability: releases signed with a trustee’s sale days away, drafted by the lender, on a take-it-or-leave-it basis.

If the numbers hold up the way the complaint lays them out, the lender is in a tough spot and it would be much easier for a judge to rescind the releases.

Lessons for Lenders

• Do not run default interest against the whole loan before maturity. A default rate charged against the entire principal because a borrower missed a payment or committed a non-monetary default, on a loan that has not come due, is a penalty. Tie the charge to what is actually past due.

• Do not stack late charges. One late payment gets one late charge. Charging 10% every month on the same delinquency and compounding it on top turns a late fee into a double charge, and into the borrower’s best exhibit.

• Do not accept payments while you foreclose. The complaint alleges the lender accepted payments from January through July 2024 with the Notice of Default and Notice of Trustee’s Sale on record. Accepting payments while pursuing a sale undercuts the default and feeds the wrongful-foreclosure theory.

• Get releases signed before the sale notice, not after. A release obtained while the borrower is staring at an imminent trustee’s sale is built for a duress attack. Paper the workout while the borrower still has options, not when he has none.

Every Wednesday, we read one California foreclosure case from the lender’s side of the table. What the borrower alleges. What it means for your file. What to do differently on the next one.

This week: a statute barely a year old gives a borrower a way to freeze a trustee's sale before it runs. This borrower invoked it two days out. The sale ran anyway.

Ramsey v. Cal. TD Specialists, Oak West 4, LLC

Court: LASC, Southeast District

Filed: May 4, 2026 (two days before the scheduled trustee’s sale)

Statute: Cal. Civ. Code § 2924.13

The borrower petitioned to enjoin a May 6 trustee’s sale on a second-position HELOC. His story: last payment September 2007, then nothing. No statements, no transfer notices, no contact from any servicer for more than 17 years. The loan was assigned three times. In December 2025, the successor lender, through its trustee, recorded a Notice of Default, and alongside it, a Certificate of Compliance under Cal. Civ. Code § 2924.13 swearing the servicer committed no unlawful practice under subdivision (b). The borrower says that’s false. He sought an injunction, equitable relief under Cal. Civ. Code § 2924.13(f), and fees.

Here is the part worth sitting with. Under Cal. Civ. Code § 2924.13(d), once a borrower petitions for relief before the sale, the court "shall enjoin" it until the petition is decided. He petitioned on May 4. Per the trustee's sale record, the sale was never postponed. On May 6, the property sold to a third party for $376,964.03. The case is still pending.

So, how does a sale, the statute was built to stop, close two days after the borrower pulls the emergency brake, and can he claw it back now that someone else owns the house?

🔒 Paid below: the takeaway and four lessons for lenders.

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From 23+ years of representing lenders in real estate litigation and foreclosures, few things are more dangerous than a poorly drafted statute. California’s Civil Code § 2924.13(h) attempts to preserve the finality of foreclosure sales—but in doing so, directly contradicts the subsection that came right before it.

“Any failure to comply with the provisions of this section shall not affect the validity of a trustee’s sale or a sale in favor of a bona fide purchaser.”

This Subsection Conflicts With the One Above It

In yesterday’s post, subdivision (g) gave borrowers the right to petition the court to set aside a completed sale based on a defective or missing certification. But now subdivision (h) says that any failure to comply shall not affect the validity of the sale. Which one controls?

There’s no clear answer.

This clause appears to protect even lender-reverted sales—not just those sold to third-party buyers. That could allow a lender to argue that a defective certification does not invalidate a completed foreclosure.

But courts may still give weight to subsection (g), especially where the borrower builds a strong record of noncompliance or misrepresentation. In practice, outcomes will likely turn on the facts, the quality of the evidence, and how the judge interprets the statute.

Don’t Rely on Ambiguity—It Will Backfire

Even if the sale is upheld, courts may still impose monetary penalties or equitable remedies for unlawful practices or wrongful foreclosure. Violating § 2924.13 and hoping to rely on subsection (h) is risky—especially in a borrower-friendly state like California.

Follow for more legal insights as this statute is tested—and litigated—in real time.

From 23+ years of representing lenders in real estate litigation and foreclosures, one trend is clear: post-sale challenges are only going to increase. With the enactment of Civil Code § 2924.13(g), borrowers now have a statute-backed method to unwind a completed trustee sale—but only for subordinate deeds of trust secured by residential property. (For more, see earlier posts on subsections (a) through (f).)

“A borrower may also petition the court to set a nonjudicial foreclosure sale aside when a certification required by subdivision (c) was never recorded or when a certification recorded pursuant to subdivision (c) indicates that the mortgage servicer engaged in an unlawful practice described in subdivision (b) or misrepresented its compliance history.”

Post-Sale Risk Now Explicitly Recognized

Before this statute, borrowers already had the ability to sue to invalidate a foreclosure based on defects in servicing or recording. But this section now codifies that ability and explicitly invites courts to set aside a completed sale if:

• The required certification under § 2924.13(c) was never recorded, or

• The certification was inaccurate or misleading

That creates new post-sale exposure for lenders.

Retroactive or Not? There’s Room to Push Back

Because the statute is silent on timing, it applies retroactively. That ambiguity may lead some borrowers to challenge Notices of Default recorded before July 1, 2025. But when a Notice of Default was recorded prior to that date—at a time when no certification was required—there’s a strong argument that the statute does not apply and the foreclosure remains valid.

Lenders with pending sales should review whether the Notice of Default was recorded before the effective date of July 1, 2025, and ensure files are defensible if challenged.

Stay Vigilant Before and After the Sale

The best way to avoid post-sale litigation is to ensure compliance up front. Lenders should confirm that a clean, accurate certification under penalty of perjury is recorded with the Notice of Default.

Follow for the final post in this series as we complete the full breakdown of California’s new foreclosure statute.

With over 23 years in real estate litigation and foreclosure, most private lenders know that California courts already had the power to block or delay a sale. But Civil Code § 2924.13(f) now puts that flexibility into writing—giving judges a list of tools to modify foreclosure outcomes based on how serious the alleged violations are.

“The court may provide equitable remedies… including, but not limited to, striking all or a portion of the arrears claim, barring foreclosure, or permitting foreclosure subject to future compliance and corrected arrearage claim.”

The Court Can Adjust the Arrears—Not the Loan

If a borrower sues to stop foreclosure and claims that an unlawful practice occurred (see earlier posts for the six specific violations), the court can now do more than just delay the sale. The judge may strike late fees or part of the arrears, stop the foreclosure entirely, or allow it to move forward once any compliance gaps are fixed.

The good news: nothing in this section allows the court to cancel the loan, forgive the principal, or erase the entire debt. Lenders who maintained compliance or corrected errors can still enforce the loan with proper documentation.

Stay Ready to Respond

If a borrower files a lawsuit followed by a TRO application—even after a clean certification has been recorded—lenders should be prepared to respond immediately. Private lenders should have a plan in place to escalate any borrower litigation and coordinate with legal counsel quickly, so that timely opposition can be filed and enforcement efforts are not delayed.

Follow for more as each part of this statute is unpacked and explained from a private lender’s perspective.

With over 23 years in real estate litigation and foreclosure, most business purpose lenders already know that judicial foreclosure is slow, expensive, and comes with a post-sale redemption period. But California’s new Civil Code § 2924.13(e) now adds another major drawback:

“It shall be an affirmative defense in a judicial foreclosure proceeding if the court finds the mortgage servicer engaged in any of the unlawful practices specified in subdivision (b).”

Unlawful Practices Now Follow the Foreclosure

This provision was enacted to prevent lenders from sidestepping the new statute by using the courts. While the certification requirement itself only applies to nonjudicial foreclosure, the consequences of failing to comply now apply to judicial actions too.

Borrowers can raise the same six issues listed in subdivision (b) as an affirmative defense in court. These include:

• Failing to communicate in writing with the borrower for 3+ years

• Missing required transfer or ownership notices

• Issuing a 1099-C and then foreclosing

• Foreclosing after the statute of limitations expired

• Not sending required account statements

All were covered in earlier posts.

The Takeaway

Judicial foreclosure won’t insulate the loan from the statute. The unlawful practice defense travels with the loan, regardless of the enforcement path. Lenders relying on business purpose exemptions should still maintain clean servicing records and verify compliance early.

Follow for more as California’s new foreclosure statute is broken down section by section for private money lenders.

With over 23 years of experience in real estate litigation and foreclosure, procedural defenses to trustee sales are nothing new. Borrowers have always had access to the courts to seek restraining orders and file claims. But this new section of California Civil Code § 2924.13 quietly raises the stakes for private lenders and their trustees.

“Upon a borrower’s petition to the court for relief before the foreclosure sale, the court shall enjoin a proposed foreclosure sale pursuant to a power of sale in a subordinate mortgage until a final determination on the petition has been made.”

The Word “Shall” Changes Everything

Borrowers already had the right to request a Temporary Restraining Order (TRO) to stop a sale. Courts could grant or deny those requests based on legal standards, urgency, and equity. But this statute uses the word “shall”—which signals a mandatory injunction, not a discretionary one.

That means if a borrower files a petition alleging a violation of § 2924.13, the court must stop the sale—even before evaluating whether the claim is true. There’s no requirement in this section for evidentiary support, detailed facts, or even a bond. The law is also silent about what legal procedure applies—TRO? Ex parte request? Regular motion?

Lenders Must Be Ready to Respond Fast

Although borrowers have always been allowed to seek a Temporary Restraining Order on 24-hours’ notice, this new provision creates greater risk because courts are now required to enjoin the sale upon filing. Once a Notice of Default is recorded, private lenders and their trustees should assume that a last-minute court challenge may follow.

Because the certification is already on record, any challenge to it must be met with an immediate legal response. Counsel should be identified in advance and available to prepare opposition quickly if needed. A prepared opposition may be the only chance to avoid a Preliminary Injunction, which can stall enforcement for months or years.

Follow for more as each part of this statute is unpacked and explained from a private lender’s perspective.

With over 23 years in real estate litigation and foreclosure, recent updates to California foreclosure law have raised new questions from private money lenders—especially those who service their own business purpose loans.

Under Civil Code § 2924.13(c), before starting a nonjudicial foreclosure, a lender or trustee must now take two extra steps—or risk the sale being stopped.

Step 1: A Certification Under Penalty of Perjury

At the same time the Notice of Default is recorded, a certification must also be recorded. This document must state either:

• No unlawful practices occurred during the life of the loan, or

• If any did occur, they must be listed clearly in the certification

This applies to the six unlawful practices discussed in earlier posts—most of which are unlikely to affect private business-purpose lenders.

Step 2: Certified Mail to the Borrower

Simultaneously with the Notice of Default, two documents must be recorded and sent to the borrower by certified mail with return receipt:

• A copy of the recorded certification

• A notice advising the borrower of their right to petition the court if they believe the certification is false or misleading

Failure to complete both steps could give the borrower grounds to block the foreclosure.

Practical Takeaway for Private Lenders

Most business purpose lenders won’t run into problems if the loan has been serviced responsibly. However, now lenders must ensure the certification is properly executed and recorded, and that the borrower receives the required notice by certified mail with return receipt requested.

Failure to properly record and serve these documents may give the borrower grounds to challenge the foreclosure. For transactions with uncertain servicing history, legal counsel should confirm compliance before proceeding.

Follow for more as each section of California’s new foreclosure law is broken down in plain terms. For questions or a compliance review, reach out directly.

With over 23 years of experience in real estate litigation and foreclosure, recent questions from private lenders reflect new uncertainty: whether the new California Civil Code § 2924.13 statute implies that periodic loan statements were legally required all along.

The last unlawful practice listed in California Civil Code § 2924.13 states:

“The mortgage servicer failed to provide a periodic account statement to the borrower when required to provide that statement by law, including, but not limited to, the federal Truth in Lending Act (TILA), and investor or guarantor requirements.”

The statute does not say “monthly statement”—it says periodic account statement. That is a defined legal term. Under Regulation Z, found in TILA Sections 1026.7 and 1026.41, the term applies only to consumer loans.

For business purpose loans, TILA does not apply. No statute has been identified that requires private money lenders to send periodic account statements on business- purpose loans secured by real estate.

Further, no violation exists unless both the law and an investor or guarantor requirement mandate the delivery of a periodic account statement. If one is missing, Section 2924.13(b)(6) does not apply.

Still, reviewing loan documents for any language about account statements remains a sound practice. Sending an annual or semi-annual loan update may help avoid misunderstandings.

Follow for more breakdowns of the remaining sections in this new statute.

Conducting or threatening to conduct a foreclosure sale after the statute of limitations has expired.

This isn’t new law. If a lender tries to collect on a loan too late, a borrower already had the right to go to court and stop it. But now, this failure is formally listed as a violation under the statute—and can block a foreclosure if the loan is secured by residential property in a junior position.

So how much time does a lender have?

It depends on what kind of enforcement is involved.

• For judicial foreclosure (suing in court), California usually gives 4 to 6 years, depending on the type of note and whether it has a definite due date.

• For nonjudicial foreclosure, where a trustee sale happens outside of court, the rule is different:

  • If the maturity date is recorded in the deed of trust: 10 years

  • If it’s not recorded: 60 years

Still, most private money loans are short term. To avoid any confusion, the safest rule is to take action within 4 years of the borrower’s default, especially if pursuing the loan through the court system.

The takeaway: review default dates and confirm whether the maturity date is ascertainable from the recorded deed of trust. Foreclosing after time runs out won’t just fail—it may now trigger a violation under § 2924.13.

Follow along as we continue breaking down the rest of this new statute.

Under the new law, it’s considered an unlawful practice to:

“Conduct or threaten to conduct a foreclosure sale after providing a form to the borrower indicating that the debt had been written off or discharged, including, but not limited to, an IRS Form 1099.”

What does that mean?

In some cases, especially when a borrower hasn’t made payments for an extended period, a lender—or their accountant—may decide to write off the loan and issue a Form 1099-C to reflect a discharge of debt. There’s no fixed rule for when this happens. It depends on the lender’s internal policies and whether the debt is considered uncollectible.

The problem arises when, after issuing that form, someone—maybe a servicer, bookkeeper, or even the lender—restarts foreclosure anyway. That’s what this section is trying to prevent.

This statute was designed to stop the foreclosure of zombie mortgages, not short-term business purpose loans. It’s unlikely to ever come up in private lending—unless someone made a major mistake.

Still, every lender should check the loan file carefully before sending any foreclosure notice. If a 1099-C or discharge form was sent to the borrower, foreclosure may be unlawful under this statute.

In that case, the only possible remedy may be to file a lawsuit in court for judicial foreclosure and declaratory relief, asking the judge to rule that the discharge was issued by mistake and is legally void.

Follow along as we continue breaking down the rest of this new statute.

The rule says a foreclosure can be challenged if:

“The mortgage servicer failed to provide a transfer of loan ownership notice to the borrower when required to provide that notice by law, including, but not limited to, the federal Truth in Lending Act (TILA), and investor or guarantor requirements.”

Just like yesterday’s post on servicing transfer notices, this rule only applies if two things are true:

1. The notice was required by law, and

2. The notice was required by investor or guarantor rules

And here’s the key: TILA, the law referenced here, only applies to consumer-purpose loans.

That means for business purpose loans, like the ones most private lenders make, TILA does not apply—and there’s no legal requirement to send a loan ownership transfer notice.

If the loan was never sold, assigned, or transferred and has been held by the original lender since origination, then this rule does not apply at all. And even if the loan was transferred, TILA and RESPA do not apply to business purpose loans, and no other law requiring an ownership transfer notice could be found. Without a legal obligation and a matching investor or guarantor requirement, there is no violation under § 2924.13(b)(3).

Another rule that sounds scary—but doesn’t apply to most private lenders.

Follow along as we continue breaking down the remaining triggers in § 2924.13.

The second listed violation reads:

“The mortgage servicer failed to provide a transfer of loan servicing notice to the borrower when required to provide that notice by law, including, but not limited to, [RESPA] and investor or guarantor requirements.”

At first glance, it seems that failing to comply with any of those listed items could trigger liability. But a closer—and grammatically sound—reading shows something else:

The statute says "by law... and investor or guarantor requirements." That “and” is important.

The better reading is that both conditions must be met:

1. The notice must be required by law, and

2. Also required by investor or guarantor agreements

If only one applies, it arguably doesn’t trigger a violation under this provision.

So for self-funded private lenders with no investor or guarantor obligations, even if a statute like RESPA or Civil Code § 2937 requires notice, the absence of a corresponding investor requirement may mean this rule does not apply—and the foreclosure is not unlawful under § 2924.13(b)(2).

Of course, this statute is brand new and has never been tested in court. This interpretation is based on grammar, statutory reading, and legal experience—but there’s no guarantee courts will interpret it the same way. Still, this reading is structurally sound and arguably more consistent with legislative drafting norms.

More to come as we continue examining each compliance trigger in § 2924.13.

Under California’s new Civil Code § 2924.13, there’s a list of things that count as unlawful practices when foreclosing on a junior lien. Today we’re looking at the first one:

“The mortgage servicer did not provide the borrower with any written communication regarding the loan… for at least three years.”

Sounds simple—but it’s easy to miss.

If you’re a self-servicing private lender, ask yourself:
Have you sent the borrower anything in writing in the last 3 years?

The good news:

• “Written communication” isn’t strictly defined.

• It could be a letter, email, text, or mailed notice.

• You don’t need formal legal documents—just proof you communicated.

Also, most private money loans are short-term (usually one year), so this may not apply to many loans. But if your loan is approaching 3 years and there’s been no contact? Send something now—even a simple status update—with tracking or proof of delivery.

This rule is easy to fix—but only if you catch it early.

More compliance insights coming soon as we continue unpacking this new law.

California’s Civil Code § 2924.13, effective July 1, 2025, targets junior liens on residential property—even if the loan is for business purposes.

The statute defines a “subordinate mortgage” as any deed of trust or mortgage recorded after another lien already encumbers the same residential property. In other words: if your lien isn’t first, it’s subordinate.

For years, being in second position was a smart move for private lenders making business purpose loans. Why? Because Civil Code § 2923.5—which imposes strict pre-foreclosure notice and contact requirements—only applies to first position, consumer-purpose loans.

Second position offered a clean exemption.
Not anymore.

Now, if your loan is secured by residential real estate and is in junior position, § 2924.13 applies. And it imposes strict compliance obligations before you can foreclose.

Here’s the exception: if your loan was originally in first position and only became junior later through subordination, the statute does not apply.

Bottom line: private lenders need to understand what “subordinate mortgage” means—because it now determines whether your foreclosure can be challenged and whether your investment gets repaid.

Follow for more as we continue breaking down this powerful new statute.

This month, we’re breaking down California’s new Civil Code § 2924.13, which applies to junior lienholders on residential property—even for business purpose loans.

Today’s focus: the term “mortgage servicer.”

According to the statute, a “mortgage servicer” includes the current mortgage servicer and any prior mortgage servicers.”

But here’s the part many private lenders miss:

If you’re servicing your own loan, you are the mortgage servicer.

You don’t need to hire a third-party company to fall into this definition. If you collect payments, send notices, or manage the loan in any way, you are self-servicing—and fully subject to the law.

And that means any compliance failures—even from a prior servicer—could expose your foreclosure to challenge.

Why it matters:
Under § 2924.13, the mortgage servicer must certify, under penalty of perjury, whether any unlawful practices occurred. That includes missteps by you, or by anyone else who serviced the loan before you.

Private lenders, this isn’t optional.
If you hold a junior lien and manage the loan, you’re wearing two hats: lender and servicer.

Understanding this distinction is key to staying compliant—and staying out of court.

Follow for more as we continue breaking down this powerful new statute.

And it uses a much broader definition of “borrower” than what you’re used to under Civil Code § 2920.5.

For years, the term “borrower” in foreclosure laws was limited. Under § 2920.5, it meant a natural person—someone potentially eligible for a loan mod. It specifically excluded LLCs, corporations, bankruptcy filers, and others.

But § 2924.13 adopts the definition from § 2929.5, which says a borrower includes:

• The trustor or mortgagor, and

• Any successor in interest to the real property before the lien is foreclosed, reconveyed, or discharged

In plain English? The “borrower” isn’t just the person who signed your note. It could be their heir, their business partner, someone who inherited the property, or even a third party who acquired title subject to your lien.

That’s a massive shift in who might now have standing to challenge your foreclosure.

And here’s the kicker: “Successor in interest” isn’t defined. Courts may interpret it broadly—especially in favor of borrowers.

Bottom line: This expanded definition applies to all loan types—including business purpose. That means more people may have a say in your foreclosure. Review your files, confirm who owns the property, and stay vigilant.

Follow for more as we break this down step by step.

Yes, this includes private lenders making business purpose loans.

The law applies to any property containing residential housing—not just 1-to-4 units. That means it could apply to apartment buildings and mixed-use properties.

Before you can start or threaten foreclosure under a subordinate mortgage, you must certify under penalty of perjury that you either:

1. Did not engage in any of six newly defined “unlawful practices,” or

2. List and admit any violations you did commit.

This certification and special notice must be recorded with your Notice of Default and mailed to the borrower by certified mail.

So what counts as an unlawful practice? There are six:

1. No written communication with the borrower for 3+ years

2. No servicing transfer notice (as required by RESPA or investor rules)

3. No loan ownership transfer notice (as required by TILA or investor rules)

4. Threatening or conducting foreclosure after sending a 1099-C or discharge notice

5. Foreclosing after the statute of limitations has expired

6. Failing to send periodic statements when required by law

If you skip these steps—or misrepresent compliance—the borrower can petition the court to stop your foreclosure, or raise these issues as affirmative defenses in a judicial action.

Bottom line: If you’re a private junior lender in California, don’t ignore this. You need to review your practices and stay compliant—now.

Follow for more as we break down each part of this new statute in upcoming posts.

• First Amendment Fight: The AP says the White House is violating the First Amendment, which protects free speech. They argue that the government shouldn’t control the words reporters use, even if it disagrees with them. The AP refused to change its wording, so the White House blocked them from events like press conferences and flights on Air Force One.

• Due Process Violation: The AP claims the White House violated the Fifth Amendment, which guarantees fair treatment. The AP says it was banned without warning and wasn’t given a chance to fight back. They argue that since other news outlets still call it the "Gulf of Mexico," the White House is unfairly picking on them.

• The White House’s Defense: Third, the White House argues that the AP’s own rules influence how others write and that the AP is pushing a political agenda instead of just reporting the news. The government believes that when a president renames something, news organizations should at least respect that decision for American readers.

The White House should win because it is a privilege not a right to be invited to cover the White House and the AP’s refusal to follow an Executive Order is political, not journalistic. The government isn’t stopping the AP from reporting—it’s just limiting access to those who won’t respect its decisions. The press should be free, but the White House also has the right to set rules for who gets in. If a news outlet chooses to fight the government, it can’t expect special treatment.