The File

Case: CSPN LLC v. W Financial REIT
Court: Santa Clara County Superior Court
Filed: August 10, 2026. Represented by counsel.
Property: Two commercial parcels, Los Gatos.
Loan: First position. $14,000,000, recorded May 2023, matures August 16, 2026
Claims: Five. Declaratory relief, injunctive relief, accounting, wrongful foreclosure, lender liability
Relief sought: Restraining order, injunction, itemized accounting, damages, attorney fees
Exhibits attached: Ten. Legal description, Promissory Note, Trustee’s Deed, Deed of Trust, four loan modifications, Demand Letter, Acceleration Letter, Notice of Default, Substitution of Trustee, Notice of Trustee’s Sale

The Timeline

8/16/2022. The lender made a $14,000,000 loan. The Deed of Trust recitals say the Borrower used that money to buy a note secured by these two properties.

1/25/2023. The Borrower foreclosed on that purchased note. The Trustee’s Deed states the debt was $26,710,876.69 and the bid was $7,000,000.

2/6/2023. The Trustee’s Deed recorded. The Borrower now owned the properties.

2/17/2023. The Borrower signed a Deed of Trust on the properties in the lender’s favor. It secured the same 2022 note.

5/4/2023. The Deed of Trust recorded.

8/16/2023. First loan modification. Maturity moved to 8/16/2024.

10/22/2024. Second modification. Maturity moved to 2/16/2025.

2/11/2025. Third modification. Maturity moved to 5/16/2025.

8/25/2025. Fourth modification. Maturity moved to 8/16/2026. The Borrower paid $400,000 against principal and agreed to pay $50,000 more each month.

3/1/2026. A payment of $169,855.56 came due. The Notice of Default states it was not paid.

3/10/2026. The lender sent a Demand Letter. It says default interest started running on 3/6/2026.

3/26/2026. Counsel for the lender sent an Acceleration Letter.

4/1/2026. A second payment came due. The Notice of Default states that one was not paid either.

4/6/2026, 2:34 p.m. The Substitution of Trustee recorded as instrument 25967998. The Notice of Default recorded in the same minute as instrument 25967999.

7/15/2026. The Notice of Trustee’s Sale recorded. It set the sale for 8/17/2026.

8/10/2026. The Borrower filed this complaint.

8/13/2026. The Borrower applied for a restraining order. The lender filed its opposition the same day.

8/17/2026. The sale ran.

8/21/2026. The court order denying the restraining order application was filed.

8/26/2026. The Trustee’s Deed Upon Sale recorded.

The Money

$14,000,000. The loan, effective August 16, 2022. Promissory Note.

$20,500,000. The face amount of the note the Borrower bought with the loan money. Deed of Trust recitals.

$26,710,876.69. The debt owed on that note when the Borrower foreclosed. Trustee’s Deed, February 2023.

$7,000,000. What the Borrower bid at that sale. Same deed.

$400,000. The principal payment the Borrower made in August 2025. Fourth modification.

$13,400,000. The principal still owed in February 2026. Lender’s monthly statement.

$169,855.56. The March 1, 2026 payment. Interest of $119,855.56 plus a $50,000 principal payment. Same statement.

$705,203.58. The reinstatement figure in the Notice of Default, stated as of April 2, 2026.

$680,822.58. The reinstatement figure the complaint says the lender used in a related court filing, same date.

$24,381.00. The difference between those two numbers.

$15,198,741.65. The estimated balance in the Notice of Trustee’s Sale.

$15,406,941.65. The debt stated in the Trustee’s Deed Upon Sale.

$12,000,000. The bid at the August 17, 2026 sale.

Claim 1. Declaratory Relief (Code Civ. Proc. § 1060)

The Borrower says a wrong date in the Acceleration Letter killed the acceleration. The Promissory Note charges 24 percent default interest without any letter.

What it asks for

A declaration that the acceleration never happened, that the lender could not use the power of sale, that the foreclosure trustee had no authority, and that the Borrower does not have to tender money first. (¶46)

What it alleges

The Acceleration Letter names the Deed of Trust as “dated August 16, 2022.” The real Deed of Trust is dated February 17, 2023. The Borrower says that mistake made the notice ineffective. (¶¶14, 41)

It also alleges the Substitution of Trustee and the Notice of Default recorded at the same time, which triggered a mailing requirement under section 2934a(b), and that no affidavit of mailing appears on the Substitution. (¶42)

What the record shows

The Acceleration Letter, Exhibit 7, says August 16, 2022. The Deed of Trust, Exhibit 4, is dated February 17, 2023.

The Demand Letter, Exhibit 6, is dated March 10, 2026. It names the Deed of Trust correctly. It says default interest runs from March 6, 2026. That is sixteen days before the Acceleration Letter.

Section 7.1 of the Promissory Note, Exhibit 2, charges default interest at 24 percent “regardless of whether or not there has been a notice of default issued by the Note Holder.”

The Substitution of Trustee is Exhibit 9. It carries a recorder’s stamp of April 6, 2026 at 2:34 p.m., instrument 25967998. The Notice of Default carries instrument 25967999.

Claim 2. Injunctive Relief (Code Civ. Proc. §§ 526, 527)

The Borrower asked the court to stop the August 17 sale. The court denied the application and the sale ran on schedule.

What the statute requires

A court may issue a restraining order when the plaintiff shows it is entitled to the relief it seeks and that the harm during the case would be great or irreparable. (¶48)

What it alleges

A sale to a third party would leave the Borrower with no way to undo the sale and no right to redeem, so it would lose the properties and its equity permanently. (¶49)

What the record shows

The Borrower applied for the order on August 13, 2026. The lender filed its opposition the same day.

The docket shows the application was denied. The order was entered August 21, 2026.

The sale ran August 17, 2026. The Trustee’s Deed Upon Sale recorded August 26, 2026.

Claim 3. Accounting

The Borrower asks a judge for an itemized payoff. The Notice of Default tells the Borrower how to ask the lender for one.

What it alleges

The lender holds the books and records needed to determine the true payoff. The amounts are inconsistent and complicated by default interest, deferred fees and advances. (¶¶52, 53)

What the record shows

The Notice of Default, Exhibit 8, says this on its face: “Upon your written request, the beneficiary or mortgagee will give you a written itemization of the entire amount you must pay.”

The complaint does not allege that the Borrower made that written request.

It does allege the Borrower was selling the properties around May 2026 and waited more than a month for a payoff demand. It gives no date, attaches no demand, and attaches no sale contract. (¶26)

Claim 4. Wrongful Foreclosure

The Borrower says the Notice of Trustee’s Sale overstated the debt. The Trustee’s Deed Upon Sale puts the debt $208,200.00 higher.

What it alleges

The foreclosure rests on defective notices: an inaccurate Acceleration Letter, inconsistent statements of the amount due, and a defective Substitution of Trustee. (¶55)

The loss of the properties, credit damage and legal fees followed from that conduct. (¶57)

What the record shows

The Notice of Trustee’s Sale states $15,198,741.65. It calls that number “reasonably estimated” at the time of first publication and says the amount “may be greater on the day of sale.”

The Trustee’s Deed Upon Sale, recorded August 26, 2026, states the unpaid debt with costs was $15,406,941.65.

The complaint says the size of the number is “driven in significant part by the application of default interest.” (¶25)

Claim 5. Lender Liability

This count is two paragraphs. Both are copied word for word from the accounting count.

What it alleges

The lender holds the books and records needed to determine the true payoff. The amounts are inconsistent and complicated by default interest, deferred fees and advances.

What the record shows

The count names no duty. It names no breach. It describes no conduct the accounting count does not already describe, and it asks for nothing the accounting count does not already seek.

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

Read more

The File

Case: Matthew Ajiake v. Persevere Lending, LLC and The Foreclosure Company, Inc.
Court: Alameda County Superior Court
Filed: August 10, 2026. The borrower filed in pro per.
Property: Single-family, Fremont. APN 501-0957-058-00
Loan: A junior lien. $250,000, recorded April 2024, matured May 1, 2025.
Claims: Nine. Cancellation of the trustee’s deed, quiet title, fraud, unfair business practices, Homeowner Bill of Rights, slander of title, emotional distress, unjust enrichment, and wrongful foreclosure.
Relief sought: Rescission of the sale, cancellation of the trustee’s deed, restoration of title, an order enforcing a pending sale escrow, restitution of an $18,500 payment, compensatory damages, statutory damages, punitive damages, fees and costs.
Exhibits attached to the complaint: None.

The Timeline

4/12/2024. A $250,000 deed of trust is recorded against the property.

5/5/2025. The Notice of Default records. It states the note matured May 1, 2025 and the default amount is $29,403.32 as of April 30, 2025. It also states the deed of trust “is not a first loan and is not subject to California Civil Code Section 2923.5 or 2923.55.”

12/16/2025. The Notice of Trustee’s Sale records. It sets the sale for January 6, 2026 and states $316,344.90 due.

12/30/2025. The borrower alleges he filed Chapter 13 to stop the January sale.

6/30/2026. The borrower alleges no bankruptcy stay was in place after this date.

7/16/2026. The borrower alleges he signed a purchase agreement with a buyer.

7/28/2026. The borrower alleges the buyer extended its approval period to August 4.

8/3/2026. The borrower alleges the bankruptcy court held a status conference he did not attend. He quotes the judge saying “I have no power to enjoin the sale,” and that the borrower had not “competently asked for a TRO.”

8/4/2026. The borrower alleges escrow sent a payoff demand request at 10:45 a.m. At noon the foreclosure trustee sold the property to an outside party for $355,000.

8/10/2026. The borrower filed this complaint in pro per.

The Money

$250,000. The deed of trust states this as the original principal.

$29,403.32. The Notice of Default states this as the default amount as of April 30, 2025.

$316,344.90. The Notice of Trustee’s Sale states this as the amount due to satisfy the obligation, plus estimated costs, expenses, fees and advances.

$355,000.00. The trustee’s published sale-result page states this as the final bid, and states the property sold to an outside party.

About $1,500,000. The complaint alleges this is the fair market value of the property.

About $1.16 million. The complaint alleges this is the equity the borrower had in the property.

$18,500. The complaint alleges the borrower paid this on September 3, 2025 to postpone a sale.

$494,000. The complaint alleges this is the payoff amount for a first mortgage.

$125,000. The complaint alleges this is the payoff amount for an IRS lien.

Claims 1 and 2. Cancellation of the Trustee’s Deed and Quiet Title (Civ. Code § 3412; Code Civ. Proc. § 760.010)

Both counts ask a court to cancel a trustee’s deed. The complaint gives no recording date and no instrument number for it.

What the Borrower alleges

The foreclosure trustee sold the property on August 4, 2026 at noon. He alleges a Trustee’s Deed Upon Sale issued and recorded in Alameda County, that it is void or voidable because the sale was unlawful, and that it clouds his title. He asks the court to cancel it, restore title to him, and declare that the defendants have no interest in the property. He alleges he has owned the property since February 1992.

The complaint’s introduction states that the defendants “have either issued or claim to have issued” a Trustee’s Deed Upon Sale. Four later paragraphs state that it recorded. No paragraph gives a recording date or an instrument number.

What the record shows

The deed of trust recorded April 12, 2024 and names an individual as beneficiary and a title company as trustee. The Notice of Default recorded May 5, 2025. The Notice of Trustee’s Sale recorded December 16, 2025 and set the sale for January 6, 2026.

The trustee’s published sale-result page for this file states the property sold on August 4, 2026 at 12:00 PM to an outside party, with a final bid of $355,000.00.

Claim 5. Homeowner Bill of Rights (Civ. Code §§ 2923.5, 2923.6, 2924.17, 2924.12)

The Homeowner Bill of Rights applies to a first lien. This deed of trust is a second, and the Notice of Default said so on its face when it recorded in May 2025.

What the statute requires

• Section 2924.15 limits the borrower-contact, dual-tracking, single-point-of-contact and loss-mitigation sections to a first lien mortgage or deed of trust secured by owner-occupied residential real property with no more than four dwelling units.

• The same section defines owner-occupied as the borrower’s principal residence securing a loan made for personal, family, or household purposes. A business-purpose loan sits outside those sections even on a property the borrower lives in.

• Section 2923.5 applies only to servicers of seven or fewer California residential loans a year. Sections 2923.6, 2923.7 and 2924.9 do not apply to those servicers.

• Section 2924.12 is the enforcement section, and it does not apply to a servicer of seven or fewer California residential loans a year. Those servicers answer under section 2924.19.

What he alleges

He alleges the defendants recorded the Notice of Default without contacting him, without assessing his finances, and without exploring alternatives, in violation of section 2923.5. He alleges they kept foreclosing while he pursued a payoff and a sale, in violation of section 2923.6. He alleges the recorded notices and a July 28, 2025 borrower’s statement were false, in violation of section 2924.17. He asks for damages under section 2924.12.

What the record shows

The Notice of Default that recorded May 5, 2025 states: “The subject Deed of Trust is not a first loan and is not subject to California Civil Code Section 2923.5 or 2923.55.”

Claim 9. Wrongful Foreclosure

The Borrower says the Notice of Default recorded before his loan came due. It recorded May 5, 2025, and it states the note matured May 1, 2025.

What he alleges

The default was manufactured. He says the lender stopped accepting payments in February 2025, refused to give payoff figures to his title company three times that year, and recorded the Notice of Default before his balloon payment came due.

He alleges dual tracking under section 2923.6, and says the lender foreclosed while his escrow was open and a payoff demand was in hand.

What the record shows

The Notice of Default recorded May 5, 2025, four days after the maturity date stated on its face.

Section 2923.6, the one code section this count cites, is limited by section 2924.15 to a first lien deed of trust.

The Notice of Trustee’s Sale recorded December 16, 2025 and set the sale for January 6, 2026. The sale ran on August 4, 2026, seven months later.

Claims 3, 4, 6, 7 and 8. Fraud, Unfair Business Practices, Slander of Title, Emotional Distress and Unjust Enrichment

All five counts repeat facts pleaded in the other counts.

What he alleges

Fraud: he alleges the lender’s attorney misrepresented his responsiveness to the bankruptcy court, and that the lender received the 10:45 a.m. payoff demand and concealed it from the foreclosure trustee.

Slander of title: he alleges the Notice of Default, the Notice of Trustee’s Sale, the trustee’s deed and a July 28, 2025 borrower’s statement of account were false when recorded.

The unfair business practices, emotional distress and unjust enrichment counts run on the same conduct, plus the $18,500 he says he paid in September 2025.

What the record shows

The Notice of Default recorded May 5, 2025. The Notice of Trustee’s Sale recorded December 16, 2025 and states $316,344.90 due.

The borrower’s statement of account he calls false is not a recorded document. The complaint gives no recording date and no instrument number for the trustee’s deed.

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

Read more

The File

Case: Francisco Mira Becerra v. Next Door Neighbor Homes, LLC and Freedom Mortgage Corporation
Court: Merced County Superior Court
Filed: August 6, 2026. The borrower is represented by counsel.
Property: Single-family, Los Banos. APN 081-174-007-000
Loan: An FHA first. $255,240, recorded July 2015, modified January 2024 to a $224,289.76 balance at 7.125%, matures February 1, 2064.
Claims: Twenty-three. Seven foreclosure statute counts, one recorded-document count, three contract counts, four fraud counts, six title and unfair business practice counts, and two collection and accounting counts.
Relief sought: An order unwinding the sale, cancellation of the notices and the trustee’s deed, quiet title, an accounting, a corrected reinstatement figure, a new loss mitigation review, damages, treble damages, punitive damages, restitution, fees and costs.
Exhibits attached to the complaint: Ten. The deed of trust, the assignment, the loan modification, the Notice of Default with its compliance declaration, the Notice of Trustee’s Sale, one text message, the notice to quit, a text thread, a stipulated judgment, and an email chain.

The Timeline

7/17/2015. A $255,240 FHA deed of trust records against the home.

1/25/2022. The assignment records. The beneficial interest moves to the current servicer.

1/22/2024. A loan modification records. The new balance is $224,289.76 at 7.125%. The payment is $1,981.39 a month. The loan maturity is 2064.

1/1/2025. The borrower stops paying per the Notice of Default. He alleges a medical crisis, two kidney surgeries, and the loss of his job.

6/18/2025. A compliance declaration is signed for the servicer. It states the borrower was contacted to review his finances and look at options to avoid foreclosure, and that thirty days have passed since that contact.

6/25/2025. The Notice of Default records. The amount required to bring the loan current is $12,718.21.

4/3/2026, 1:06 p.m. The servicer texts the borrower that he has been approved for an FHA Permanent Home Retention Program with a Trial Payment Plan. The same day, the foreclosure trustee signs the Notice of Trustee’s Sale.

4/6/2026. The Notice of Trustee’s Sale records. It sets the sale for May 6 and states an unpaid balance and other charges of $258,942.51.

4/10/2026. The Notice of Trustee’s Sale is posted on the front door. That is twenty-six days before the sale.

5/3/2026. The borrower alleges he called and asked for a certified reinstatement figure, and was told it would take seven days to produce. The sale was three days away.

5/5/2026. He alleges he called and asked that the sale be stopped, and that the servicer refused. He alleges he tried to file Chapter 13 that day, filed in the wrong court, was rejected, was told he had one week to refile, and did not refile.

5/6/2026. The sale runs. A third party buys the home for $304,850.01.

5/22/2026. The trustee’s deed is signed and notarized.

5/28/2026. The trustee’s deed records.

6/9/2026. The borrower alleges the buyer’s agent offered him thirty days to move out and a $6,000 payment.

6/10/2026. A three-day notice to quit is posted. It was signed on June 5.

8/6/2026. The complaint is filed. That is three months after the sale.

The Money

$255,240.00. Initial amount borrowed in July 2015.

$224,289.76. The recorded loan modification sets this as the new principal balance.

$12,718.21. The Notice of Default states this is the amount required to bring the loan current as of June 18, 2025.

$258,942.51. The Notice of Trustee’s Sale states this as the unpaid balance and other charges as of April 3, 2026.

$259,752.29. The trustee’s deed states this as the amount of the unpaid debt at the sale.

$304,850.01. The trustee’s deed states this as the amount the buyer paid.

$45,097.72. Surplus after the foreclosure sale. The complaint never mentions it.

Claims 1 to 3. Borrower Contact and Loss Mitigation (§§ 2923.55, 2923.6, 2923.7)

All three counts start with a loan modification application, and the borrower pleads that he was never allowed to file one.

What he alleges

Through 2025 the servicer texted him that it had received his mortgage assistance application and was reviewing it. On April 3, 2026 it texted that he was approved for an FHA retention program with a trial payment plan. He alleges there was no single point of contact, no written acknowledgment, no written denial, and no appeal.

What the record shows

Section 2923.6(c) starts running when a borrower submits a complete application. Section 2923.6(h) says an application is complete when the borrower has supplied the servicer with all the documents the servicer required. The trigger is the borrower submitting an application.

The complaint says he never did it. He pleads that he “was never given the opportunity to submit a formal mortgage assistance application.” He pleads that the servicer claimed to review an application he “never submitted.”

The elements paragraphs of these same counts then say he did submit one, in three separate places.

Claim 4. Notice of the Sale (§§ 2924, 2924b)

The borrower received both notices, and he concedes the posting was on time.

What he alleges

He received the Notice of Default by regular mail but not by certified mail. He alleges he did not receive the Notice of Trustee’s Sale by certified mail either, and found it posted on his door. He pleads the mailing defect on information and belief and says the proof sits with the servicer and the foreclosure trustee.

What the record shows

The Notice of Trustee’s Sale recorded April 6, was posted April 10, and the sale ran May 6.

The trustee’s deed recites that the foreclosure trustee mailed the Notice of Default within ten days of recording it, and mailed the Notice of Trustee’s Sale at least twenty days before the sale date, by certified mail with postage prepaid.

Under § 2924(c), a recital of compliance with the mailing and publication requirements is prima facie evidence of compliance. In favor of a bona fide purchaser, it is conclusive evidence.

Neither foreclosure trustee entity is named as a defendant.

Claims 5 to 7. Loss Mitigation Notices and Dual Tracking (§§ 2924.9, 2924.10, 2924.11)

These three counts run on the same application the complaint says was never submitted.

What he alleges

After the Notice of Default recorded, he received no written notice describing the options available to him. The servicer never acknowledged an application in writing, never told him what was missing, and never gave him a deadline or a contact. It kept advancing the foreclosure while telling him a review was underway.

What the record shows

Section 2924.9 requires a servicer that offers foreclosure prevention alternatives to send a written communication within five business days after recording a Notice of Default, telling the borrower he may be evaluated, whether an application is required, and how to get one.

That section applies to large servicers only. A lender servicing seven or fewer California residential loans in a calendar year is exempt.

The rest of this group turns on the same missing modification application as Claims 1 to 3. The complaint describes texts about an application, and pleads in the same filing that no application was ever submitted.

Claim 8. Accuracy of the Recorded Documents (§ 2924.17)

The declaration says the servicer called him. He says the call never happened.

What he alleges

The compliance declaration attached to the Notice of Default is false, because no one ever called him to review his finances or explore options to avoid foreclosure. He also alleges the default and payoff figures were not supported by competent and reliable evidence.

What the record shows

Section 2924.17(a) requires a recorded compliance declaration, a Notice of Default and a Notice of Sale to be accurate and complete and supported by competent and reliable evidence. Section 2924.17(b) requires the servicer to review that evidence before it records, covering both the borrower’s default and the right to foreclose.

The recorded declaration tracks that language. It is dated June 18, 2025, signed by a named employee of the servicer, and it certifies that the declaration is accurate, complete and supported by competent and reliable evidence the servicer reviewed.

The figures are documented. The Notice of Default states $12,718.21 to bring the loan current in June 2025. The Notice of Trustee’s Sale states $258,942.51 in April 2026. The trustee’s deed states $259,752.29 at the sale a month after that. Three recorded documents track each other.

One more point a lender should know. Section 2924.17(c) gives enforcement to government entities and to the state licensing departments, and only for multiple and repeated uncorrected violations. A borrower’s own route to a remedy runs through § 2924.12, not through § 2924.17 itself.

Claims 9 to 11. The Contract Counts (Breach, Good Faith, Promissory Estoppel)

The borrower missed the installment due January 1, 2025 and asked for the payoff figure three days before the sale.

What he alleges

The servicer breached paragraphs 9(d), 10, 13 and 18 of the FHA deed of trust and breached the loan modification. It refused to give him a reinstatement figure, sent a paperless billing notice instead, and would not postpone the sale.

What the record shows

The modification took effect February 1, 2024 at $1,981.39 a month. The Notice of Default states he did not make the installment due January 1, 2025, eleven months later. The Notice of Default recorded June 25, 2025. The Notice of Trustee’s Sale recorded April 6, 2026.

He alleges he first asked for a certified reinstatement figure on May 3, 2026. That is about sixteen months after the missed installment the Notice of Default names, and three days before the sale.

Claims 12 to 15. The Fraud Counts (Fraud, Negligent Misrepresentation, Promissory Fraud, Concealment)

One of the four statements is in writing. The rest are phone calls.

What he alleges

Four promises were false when they were made. The April 3 approval text. The May 3 promise that a reinstatement quote was coming in seven days. The buyer’s agent promising thirty days and $6,000 on June 9. A second agent promising a moving contractor who never came.

What the record shows

The alleged approval text is attached and timestamped. The alleged emails with the buyer’s second agent are attached.

The May 3 call, the May 4 call, the May 5 call, and the June 9 call have nothing behind them. No letter, no email, no confirming text. Each one becomes a swearing contest.

Claims 16 to 21. The Title Counts (Unfair Business Practices, Quiet Title, Slander of Title, Cancellation of Instruments, Wrongful Foreclosure, Declaratory Relief)

A third party bought the property at auction, and that is the hardest fact in the case for the borrower.

What he alleges

The notices and the trustee’s deed should be cancelled, title should return to him, and the sale should be undone. He argues the buyer is not a bona fide purchaser under § 2924.12(e), because the buyer buys foreclosed homes for a living, and because he was in “open, notorious, exclusive, and continuous possession” of the home.

What the record shows

Section 2924.12(a)(1) gives a borrower an injunction only while no trustee’s deed has recorded. Here the deed recorded on May 28, 2026.

Section 2924.12(b) covers the period after the deed records. It makes a servicer liable for actual economic damages resulting from a material violation that was not corrected before the deed recorded, and it allows the greater of treble actual damages or $50,000 where the violation was intentional, reckless, or willful.

Section 2924.12(e) says no violation of the article affects the validity of a sale in favor of a bona fide purchaser and its encumbrancers for value without notice.

The trustee’s deed states on its face that the buyer was not the foreclosing beneficiary. The buyer paid $304,850.01 in cash at a public auction against a $259,752.29 debt, which is $45,097.72 over the debt. The complaint never alleges the price was too low, never alleges the bidding was rigged, and never states what the buyer paid.

Claims 22 and 23. Debt Collection and Accounting (Rosenthal Act, Accounting)

The borrower asks a court to determine a balance that three recorded documents already state.

What he alleges

The servicer called and hung up after one ring for about three months. It sent texts that carried no useful information. It demanded the full accelerated balance instead of the arrears. The figures cannot be squared, so a court should order an accounting.

What the record shows

The Notice of Default states $12,718.21 as of June 18, 2025. The Notice of Trustee’s Sale states $258,942.51. The trustee’s deed states $259,752.29. All three came from recorded documents, and they line up with each other.

The count is pleaded under the Rosenthal Act by name. The complaint gives no code section for it anywhere.

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

Read more

The File

Case: Javier Valdez v. Select Portfolio Servicing, Inc. and Federal Home Loan Mortgage Corporation, as Trustee for the Seasoned Credit Risk Transfer Trust, Series 2017-1
Court: San Bernardino County Superior Court, San Bernardino District
Filed: August 5, 2026. The borrower is represented by counsel.
Property: Single-family, Fontana. APN 0230-201-12-0-000
Loan: A conventional first. $366,000, recorded March 2007, matures April 1, 2037. Adjustable rate with an interest-only addendum.
Claims: Seven. Five Homeowner Bill of Rights counts, unfair business practices, and wrongful foreclosure.
Relief sought: Damages, civil penalties of the greater of treble damages or $50,000, an injunction to stop the trustee’s deed from recording, restitution, disgorgement, an order vacating the notice of sale, and costs.
Exhibits attached to the complaint: Four. The deed of trust, the assignment, the Notice of Trustee’s Sale, and the Notice of Default with its compliance declaration.

The Timeline

3/6/2007. A $366,000 deed of trust is recorded against the property. The loan matures April 1, 2037.

3/10/2021. The assignment records. The beneficial interest moves from the original nominee beneficiary to the current beneficiary, a securitization trust.

8/7/2024. The compliance declaration attached to the Notice of Default states that contact was made with the borrower on this date to assess his financial situation and explore options to avoid foreclosure.

1/1/2025. The Notice of Default states that the borrower did not make the installment due on this date, and made no installment payment after it.

8/15/2025. The borrower alleges he submitted a complete loan modification application and requested a single point of contact. No sale had been scheduled at this point.

10/29/2025. The Notice of Default records. The amount required to bring the loan current is $18,582.09 as of the day before.

2/2/2026. The Notice of Trustee’s Sale records. It sets the sale for March 12, 2026 and estimates the unpaid balance and other charges at $325,963.71.

3/12/2026, 12:00 p.m. The foreclosure trustee holds the sale at the San Bernardino courthouse. The property sells to a third party for $485,000.

3/31/2026. The trustee’s deed is executed and notarized.

4/2/2026. The trustee’s deed records. It states the unpaid debt as $327,717.69 and the amount paid by the purchaser as $485,000.00. It states that the purchaser was not the beneficiary.

4/23/2026. The complaint is signed.

8/5/2026. The complaint is filed.

The Money

$366,000.00. Original principal, per the recorded deed of trust.

$18,582.09. The amount required to bring the loan current as of October 28, 2025, per the Notice of Default.

$325,963.71. Estimated unpaid balance and other charges, per the Notice of Trustee’s Sale recorded February 2, 2026.

$327,717.69. The unpaid debt, per the trustee’s deed.

$485,000.00. What the third-party purchaser paid at the sale on March 12, 2026. The documentary transfer tax of $533.50 on the recorded deed matches that figure.

$157,282.31. The surplus. What the property sold for, less the unpaid debt, before the costs of sale.

$50,000. The statutory penalty the complaint asks for, as the alternative to treble damages.

Claim 1: Contact before the Notice of Default (§ 2923.5)

The borrower sues under the statute that covers small servicers. A different statute covers a servicer this size, and this servicer said so in the declaration the borrower attached to his own complaint.

What the statute requires

Before recording a Notice of Default, the servicer must contact the borrower in person or by telephone to assess his financial situation and explore options to avoid foreclosure.

Two versions of that duty exist. Civil Code § 2923.5 covers small servicers, meaning anyone servicing seven or fewer California residential loans in a calendar year, and licensed lenders and brokers that foreclosed on 175 or fewer California residential properties last year. Civil Code § 2923.55 covers everyone larger. A servicer answers under one or the other, never both.

What the borrower alleges

That he was living at the property, received no mail and no messages, and that the servicer failed to satisfy § 2923.5 before recording the Notice of Default.

What the record shows

The declaration attached to the Notice of Default is titled California Declaration of Compliance, Civil Code § 2923.55(c). That is the form for the larger servicer. The borrower attached it to his complaint.

Box one on that form is checked. It reads that on August 7, 2024, contact was made with the borrower to assess his financial situation and explore options to avoid foreclosure. It is signed under penalty of perjury and dated October 1, 2025.

Claim 2: Single point of contact (§ 2923.7)

Nothing in the recorded file answers this claim. It will be decided on the servicer’s own records.

What the statute requires

When a borrower requests a foreclosure prevention alternative, the servicer must promptly establish a single point of contact and give the borrower one or more direct means of communication with it. That contact must make sure the borrower is considered for whatever foreclosure prevention alternatives the servicer actually offers. The section does not apply to a servicer handling seven or fewer California residential loans in a calendar year.

What the borrower alleges

That he requested a single point of contact on August 15, 2025 when he submitted his loan modification application, that none was ever assigned, and that the failure cost him the chance to complete a modification and save the property.

What the record shows

Recorded documents do not show whether a single point of contact was assigned, and would not be expected to. This claim will be answered by the servicer’s own correspondence and servicing notes, or by their absence.

Claim 3: Notice of foreclosure alternatives (§ 2924.9)

The duty falls only on a servicer that actually offers foreclosure prevention alternatives, and not where the borrower has already been through the modification process.

What the statute requires

Within five business days after a Notice of Default records, a servicer that offers one or more foreclosure prevention alternatives must send the borrower a written communication saying he may be evaluated for one, whether an application is required, and how to obtain it.

A servicer that offers no such program owes nothing under this section. The duty also does not attach where the borrower has already exhausted the loan modification process. The section does not apply to small servicers at all.

What the borrower alleges

That no notice of foreclosure alternatives followed the recording of the Notice of Default within five business days.

What the record shows

The recorded Notice of Default is stamped October 29, 2025. Nothing in the exhibits shows what was or was not mailed in the days after it.

Claim 4: Dual tracking (§ 2923.6(c))

This claim depends on a complete loan modification application being on file when the notices recorded. The application is not attached, and the statute lets the servicer decide what makes one complete.

What the statute requires

While a complete first lien loan modification application is pending, the servicer may not record a Notice of Default, record a notice of sale, or conduct a trustee’s sale. That protection lasts until the servicer denies the application in writing and any appeal period runs, or the borrower turns down an offered modification, or the borrower accepts one and then defaults on it.

The statute defines the word that carries the claim. An application is complete when the borrower has given the servicer every document the servicer requires, within the timeframes the servicer sets. Much of this section does not apply to a small servicer.

What the borrower alleges

That he submitted a complete application on August 15, 2025, and that the servicer recorded the notices and sold the property anyway, while the application sat in review with no determination.

What the record shows

No application appears in the exhibits. No transmittal, no acknowledgment, no list of what was sent, and no date other than the one pleaded.

The recorded Notice of Default is stamped October 29, 2025, about ten weeks after the date the borrower gives for his application. The Notice of Trustee’s Sale is stamped February 2, 2026.

Claim 5: The appeal after a denial (§ 2923.6(e))

The right to appeal runs from a written denial. The same count says no determination was ever made.

What the statute requires

If a loan modification application is denied, the borrower has at least 30 days from the date of the written denial to appeal it. The servicer then cannot record a notice of sale or conduct a trustee’s sale until the later of 31 days after the borrower is notified of the denial in writing, or the periods that follow an appeal.

Every one of those deadlines is measured from a written denial. Without one, none of them start.

What the borrower alleges

That the servicer failed to give him a right to appeal the denial of his application, and, in the same sentence, that the denial “is assumed” because no determination was provided.

What the record shows

No written denial and no determination appears in the exhibits, and the complaint does not allege that either exists.

Claim 6: Unfair business practices (§ 17200)

This claim has no life of its own. It borrows whatever violation the five counts above it establish.

What the statute requires

California lets a person sue a business for an unlawful, unfair or fraudulent business practice. The plaintiff has to identify conduct that is actually unlawful or unfair, and the remedies are restitution and an injunction. Damages are not available under it.

What the borrower alleges

That the servicer ran a lengthy loss mitigation process that caused interest, late fees and foreclosure costs to accumulate, that it impeded a timely approval or denial, that it ignored his communications, and that it violated the Homeowner Bill of Rights sections pleaded above.

What the record shows

The unlawful conduct this count borrows is the five Homeowner Bill of Rights counts. It rises or falls with them.

The count asks for restitution and disgorgement of profits. The complaint does not identify a payment made to either defendant that would be given back.

Claim 7: Wrongful foreclosure

The purchaser was not the beneficiary. Civil Code § 2924.12(e) states that no violation of the Homeowner Bill of Rights affects the validity of a sale in favor of a bona fide purchaser for value without notice.

What the claim is

A wrongful foreclosure claim asks a court to undo a completed trustee’s sale, on the ground that the sale was conducted illegally, fraudulently or oppressively, and that the borrower was harmed.

What the borrower alleges

That the servicer recorded a notice of sale on February 2, 2026 while his loan modification was pending, that the defendants “will cause” an illegal, fraudulent or willfully oppressive sale, that he is excused from tender, and that he is entitled to have the sale date vacated and the Notice of Default and Notice of Trustee’s Sale cancelled.

What the record shows

The sale was held on March 12, 2026. The trustee’s deed recorded on April 2, 2026, three weeks before the complaint was signed and four months before it was filed.

The deed states on its face that the purchaser was not the beneficiary. It recites a cash bid of $485,000.00 by the highest bidder at public auction.

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

Read more

The File

Case: Hartsook 14001, LLC v. Selene Finance LP, U.S. Bank Trust National Association as Owner Trustee for RCF 2 Acquisition Trust, MTC Financial Inc. dba Trustee Corps, David Brown and Julian Raymond
Court: Los Angeles County Superior Court, Van Nuys
Filed: August 4, 2026. Verified complaint. The plaintiff is represented by counsel.
Property: Single-family, Sherman Oaks. APN 2269-008-018
Loan: A conventional first. $1,665,000, recorded May 2022, matures June 1, 2052.
Plaintiff: A limited liability company that bought the property in 2023 and took title subject to that loan. It is not the borrower.
Claims: Five. Declaratory relief, accounting, injunction, unfair business practices, and estoppel.
Relief sought: Declarations, an accounting, injunctions, restitution, attorney’s fees and interest. No damages of any kind.
Exhibits attached to the complaint: None.
Hearings held to date: None. The first is a case management conference set for December 2, 2026.

The Timeline

5/17/2022. A $1,665,000 deed of trust records against the property. Two individuals are the borrowers. The loan matures June 1, 2052.

3/1/2023. The Notice of Default recorded two years later states that the borrowers did not make the payment due on this date, and made no payment after it.

8/29/2023. The grant deed records. The two borrowers transfer the property to the buyer. The buyer pays $10,444.00 in documentary transfer taxes.

6/26/2025. The Notice of Default records. The amount required to bring the loan current is $449,667.74.

9/24/2025. The Notice of Trustee’s Sale records. It sets the sale for October 28, 2025. It states the total unpaid balance and estimated costs as $2,129,356.67.

8/4/2026. The buyer files the complaint.

8/7/2026. The buyer files a notice of lis pendens with the court.

8/10/2026. The buyer files a second notice of lis pendens.

8/11/2026, 10:17 a.m. The foreclosure trustee holds the sale. The property sells back to the beneficiary for $1,800,000.

12/2/2026. The case management conference, Department A, Van Nuys. Nothing is scheduled before it.

The Money

$1,665,000. Original principal on the first loan, per the recorded deed of trust.

$10,444.00. Documentary transfer taxes paid when the grant deed recorded in August 2023.

$449,667.74. The amount required to bring the loan current as of June 25, 2025, per the Notice of Default.

$2,129,356.67. Total unpaid balance and estimated costs, per the Notice of Trustee’s Sale recorded September 24, 2025.

$2,125,000.00. The value of the property, as alleged in the complaint.

$1,657,029.68. The secured claim amount, as alleged in the complaint.

$1,800,000. What the property sold for at the trustee’s sale on August 11, 2026, back to the beneficiary.

Claim 1: Declaratory relief

The buyer asks the court to declare that it holds the borrower’s rights. The recorded deed of trust says a new owner gets those rights only by written assumption with lender approval.

What this claim is

A declaratory relief claim asks a judge to state what the parties’ rights are when there is a real dispute about them. It does not order anyone to do anything.

What the buyer says

That it owns the property. That the servicer and the beneficiary must recognize it as the party entitled to payoff, reinstatement, cure, assumption and account information. That they cannot rely on the two sellers to defeat those rights. That the court must determine the amount of the secured claim.

What the record shows

The buyer is not the borrower. The recorded deed of trust names two individuals as the borrowers, and they are the same two people who later sold the property.

That deed of trust is a standard uniform instrument. Section 13 says a person who takes title gets the borrower’s rights only if that person assumes the loan in writing and the lender approves. Section 18 lets the lender demand payment in full if the property transfers without the lender’s prior written consent, and it specifically covers a transfer where the new owner is not a natural person. The buyer is a limited liability company.

The complaint does not allege a written assumption. It does not allege lender approval. It does not allege written consent to the transfer. It says the transaction “contemplated” that the buyer would pursue an assumption.

The complaint also never says when the loan went into default. The recorded Notice of Default does. It states that the borrowers did not make the payment due March 1, 2023, and made no payment after it. The grant deed recorded on August 29, 2023, almost six months later.

Claim 2: Accounting

The buyer says it could not find out what was owed. The recorded documents in this file each describe a way to ask.

What this claim is

An accounting asks a court to make the other side produce a full record of what is owed. A court orders one when one side holds all the records and the other side cannot compute the number on its own.

What the buyer says

That the amount of the debt is uncertain and disputed. That it cannot determine the payoff, the reinstatement amount, the arrears or the cure amount without a complete accounting. It then lists eighteen categories it wants broken out, from principal and interest down to inspection fees and suspense-account credits.

What the record shows

Two recorded documents in this file already describe how to get the amount due.

The Notice of Default states, in plain type: “Upon your written request, the Beneficiary or Mortgagee will give you a written itemization of the entire amount you must pay.” That same notice prints the contact for anyone who wants the amount required to stop the foreclosure, with a street address, a telephone number and the trustee’s file number.

The deed of trust covers it as well. Section 25 is titled Statement of Obligation Fee, and it refers to furnishing that statement under the California Civil Code.

The complaint does not allege that anyone ever made a written request.

Claim 3: Injunctive relief

Asking for an injunction inside a complaint does not stop a trustee’s sale. Only a court order does. Nobody asked for one, and the property sold seven days after the buyer filed.

What this claim is

An injunction is a court order telling someone to stop doing something. A request for one written into a complaint is not an order. A judge grants it, and only after a party applies and the court hears the application.

What the buyer says

It asks the court to bar the defendants from adding avoidable charges, from refusing to give it payoff, reinstatement, loan history and account information, from communicating with the two sellers in a way that impairs its ownership, and from taking any action inconsistent with its rights as owner.

What the record shows

The buyer filed the complaint on August 4, 2026. The foreclosure trustee held the sale on August 11, 2026 at 10:17 a.m. The property sold back to the beneficiary for $1,800,000.

The court’s case summary shows no hearing of any kind in this case. It shows no application for a temporary restraining order and no order shortening time. The first calendared date is a case management conference on December 2, 2026, almost four months after the sale.

What the buyer did file were two notices of lis pendens, on August 7 and August 10. A lis pendens records notice that a lawsuit affecting title is pending. It does not stop a trustee’s sale.

Claim 4: Unfair business practices (§ 17200)

An unfair business practices claim has to borrow a violation from some other law. This complaint cites no other law.

What this claim is

California lets a person sue a business for an unlawful, unfair or fraudulent business practice. The plaintiff has to point to something the business actually did wrong. The remedy is restitution and an injunction. Damages are not available under it.

What the buyer says

Seven practices, all versions of one complaint: that the servicer refused to recognize or deal with it as the title owner, refused to give it account and payoff information, kept foreclosing while it tried to resolve the loan, dealt with the two sellers instead, and let interest and fees accrue in the meantime. The complaint states expressly that it does not seek damages under this count.

What the record shows

The unlawful part of a § 17200 claim comes from another statute. This complaint cites Business and Professions Code § 17200 itself, and two Code of Civil Procedure sections about injunctions. That is all. It cites no Civil Code section, and no provision of California’s foreclosure law.

The declaration attached to the recorded Notice of Default names the borrowers. It lists the two individuals, identifies the servicer, and states that the servicer contacted the borrower and that thirty days or more passed after that contact. The buyer is not named on it, because the buyer is not the borrower.

Claim 5: Equitable estoppel and promissory estoppel

The promise the buyer relied on is never identified. The complaint points to an insurance request.

What this claim is

Estoppel stops a party from denying something it led the other side to rely on. Promissory estoppel enforces a promise when the other side reasonably relied on it and got hurt. Both require a promise or a representation that can be identified.

What the buyer says

That the servicer asked it to obtain or keep insurance on the property and to name the servicer on that insurance. That it complied. That the request acknowledged its ownership. That it relied by spending money on repairs, insurance and maintenance, and that it was harmed when the servicer later refused to deal with it as owner.

What the record shows

The complaint never identifies a promise. It gives no date, no person who spoke, no letter, no email, and no phrase that was said. The only conduct it points to is a request to insure the collateral.

The loan itself requires insurance on the collateral, no matter who holds title. Under the same recorded deed of trust, a new owner gets the borrower’s rights only by written assumption with lender approval. A request to keep the property insured is not a promise to let a non-borrower assume or cure the loan.

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

Read more

The File

Case: Little v. Wang, Zhang and Vantage Capital, Inc.
Court: Los Angeles County Superior Court, Compton Judicial District
Filed: July 8, 2026. The plaintiffs are represented by counsel.
Properties: Two houses. One in unincorporated Los Angeles County, one in Compton.
Loans: Two second-position loans, both recorded in 2025. $180,000 and $135,000. Each deed of trust states that the property is an investment property.
Lenders: Two private individuals. Each holds one loan, each takes an undivided 100% interest.
Claims: Three. Breach of the covenant of good faith and fair dealing, unfair business practices, and negligent supervision.
Relief sought: Damages, emotional distress damages, attorney’s fees, and an injunction stopping both sales.
Exhibits attached to the complaint: None.

The Timeline

2/12/2025. The borrower signs a $135,000 second loan on the Compton house. The deed of trust states that the property is an investment property.

2/19/2025. That deed of trust records.

4/16/2025. The borrower signs a $180,000 second loan on the 135th Street house. This deed of trust also states that the property is an investment property.

4/24/2025. That deed of trust records.

7/1/2025. Civil Code § 2924.13 takes effect. It applies to foreclosures on second and other junior deeds of trust.

10/1/2025. The Notice of Default later recorded on the Compton loan states that the payment due on this date was not made, and that no payment was made after it.

11/1/2025. The Notice of Default on the 135th Street loan states the same, beginning with the payment due on this date.

12/3/2025. Both lenders sign a Declaration of Compliance under Civil Code § 2923.5. Each checks the box stating that the lender contacted the borrower and that thirty days or more have passed.

12/12/2025. Both Notices of Default record. The amounts needed to bring the loans current are $7,982.17 and $7,389.75.

3/16/2026. Both Notices of Trustee’s Sale record. Same foreclosure trustee, same sale date, same time, same place. Unpaid balances of $150,646.53 and $197,149.57.

7/8/2026. The complaint is filed.

10/14/2026. The date set for both trustee’s sales, per the foreclosure trustee’s published sales calendar.

The Money

$180,000 and $135,000. Original principal on the two second loans, per the recorded deeds of trust.

$7,389.75 and $7,982.17. The amounts needed to bring each loan current, stated in the two Notices of Default as of December 3, 2025.

Over $30,000. The only dollar figure anywhere in the complaint. The borrowers allege it covers late fees, a 6% default fee, trustee’s fees and administrative fees from an earlier foreclosure. The borrowers attach nothing to support it, and no figure close to it appears in either recorded notice.

$197,149.57 and $150,646.53. Total unpaid balance stated in the two Notices of Trustee’s Sale, March 16, 2026.

Claim 1: Breach of the covenant of good faith and fair dealing

The borrowers say the duty the lenders broke comes from the Homeowner Bill of Rights. Those laws do not apply to a second loan against an investment property.

What this claim is

Every contract in California carries an unwritten promise. Neither side will do something that destroys the other side’s benefit of the deal. Lawyers call it the covenant of good faith and fair dealing. A borrower can sue a lender for breaking it.

The promise comes from the contract itself. The terms of the loan decide what the lender actually promised.

What the borrowers say

The lenders foreclosed instead of working with them. The lenders charged interest, late fees and attorney’s fees that were not necessary. The lenders gave them no chance to catch up.

They say private lenders normally allow a fifteen-day grace period, and that they were never more than a few days late on a payment.

The borrowers allege that the source of the duty is the Homeowner Bill of Rights, and that the purpose of those laws is to protect homeowners from exactly this kind of treatment.

What the record shows

The Homeowner Bill of Rights is a set of California laws that protect homeowners during a foreclosure. It does not apply to every loan. It applies to first mortgages, on a home the borrower lives in, where the borrower took the loan for personal or family reasons.

These are second loans. The borrowers say so in their own complaint. They also state that the first mortgages are held by a different lender who is not part of the case and who is being paid on time.

Both recorded deeds of trust state that the property is an investment property.

The Homeowner Bill of Rights therefore does not apply to these two loans, and it cannot supply the duty the borrowers say the lenders broke.

That leaves the loan contract itself. The borrowers did not attach the promissory notes or the deeds of trust to the complaint, and neither promissory note is recorded. Without the loan documents, there is no way to know what either lender actually promised, including whether either loan allows a grace period of any length.

The recorded notices also describe a longer default than the complaint does. One Notice of Default states that the payment due October 1, 2025 was not made and that no payment was made after it. The other states the same beginning November 1, 2025. The Notices of Trustee’s Sale recorded four and a half months later.

Claim 2: Unfair business practices (§ 17200)

Two of the three laws this claim relies on do not apply to these loans. The third one does, and the required certificate does not appear in the record.

What this claim is

California law lets a person sue a business for an unfair or unlawful business practice. To win, the borrower has to point to something the business actually did wrong. This complaint points to three things.

What the borrowers say

First, that the lenders started foreclosure without allowing a grace period.

Second, that the lenders did not follow the Homeowner Bill of Rights.

Third, that the lenders never recorded a certificate of compliance required by Civil Code § 2924.13.

They ask the court to stop both sales, and to order the lenders to follow the Homeowner Bill of Rights and § 2924.13 going forward.

What the record shows

The grace period allegation and the Homeowner Bill of Rights allegation both fail. The Homeowner Bill of Rights applies to first mortgages on an owner-occupied home where the borrower took the loan for personal or family reasons. These are second loans, and both deeds of trust state that the property is an investment property. No grace period appears in either deed of trust.

The § 2924.13 allegation is different, and it is the part of this complaint that matters.

Civil Code § 2924.13 is a newer California law. It took effect on July 1, 2025. It applies to foreclosures on second and other junior deeds of trust, which is what these two loans are. It requires a certificate of compliance stating that the lender did not commit any of the unlawful practices the statute lists.

Both Notices of Default in this case recorded on December 12, 2025, five months after that law took effect.

There does not appear to be a § 2924.13 certificate attached to either Notice of Default, as the statute requires.

Claim 3: Negligent supervision

The company the borrowers blame does not appear on a single recorded document in either foreclosure.

What this claim is

The borrowers sued a company alongside the two lenders. Their theory is that both lenders work for that company, and that the company failed to supervise them.

What the borrowers say

That both lenders are employees of the company. That the company has by-laws, articles of incorporation, insurance and a code of conduct. That supervisors there allowed the two lenders to act the way they did.

Every one of those statements is made on information and belief, which means the borrowers do not claim to know it is true. The complaint also admits it does not know what form the company takes, so it names three possible versions of it.

The borrowers want that company to pay their attorney’s fees.

What the record shows

Each deed of trust names one individual lender, in her own name, holding the entire loan. No company is named on either one.

The company does not appear on either deed of trust, either Notice of Default, either signed declaration, either Notice of Trustee’s Sale, or the foreclosure trustee’s published sales calendar.

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

Read more

The File

Case: Rodriguez v. Leslie R Brewer Money Purchase Plan
Court: Santa Barbara County Superior Court
Filed: July 29, 2026. The borrower is represented by counsel.
Property: Single-family home in Carpinteria.
Loan: $765,000, recorded January 2023, came due November 2023.
Claims: Four claims under California's foreclosure statutes, plus one unfair business practices claim.
Relief sought: An order stopping the sale, civil penalties, damages, restitution, and costs.

The Timeline

11/9/2021. A different private lender records a $660,000 loan on this house. It comes due in thirteen months.

12/1/2022. That loan comes due.

1/12/2023. The current lender records a $765,000 loan. The new loan comes due in ten months.

1/31/2023. The prior lender’s deed of trust is reconveyed, on payment in full.

11/1/2023. The loan comes due. It is not paid.

1/13/2026. The lender signs the declaration that has to go on record with a Notice of Default.

5/20/2026. The foreclosure trustee records the Notice of Default with that declaration attached. The amount stated to pay the loan off is $1,101,328.23 as of 4/30/2026.

6/24/2026. The borrower alleges a complete loan modification application went to the lender.

7/29/2026. The borrower files this lawsuit, asking the court to stop a trustee’s sale set for 9/11/2026.

No Notice of Trustee’s Sale has been recorded. Three months have to pass after the Notice of Default before one can be, so as of the filing date there was no sale notice on record and none could be.

The Money

$660,000. The prior private loan on this house. Recorded November 2021.

$765,000. The loan now in foreclosure. Recorded January 2023.

$1,101,328.23. What the Notice of Default says it takes to pay the loan off, as of April 30, 2026.

Claim 1: Contact with the borrower before recording (§ 2923.5)

This statute reaches only lenders who service seven or fewer California loans in a year. By suing under it, the borrower has placed this lender in that group.

What the law requires.

Before recording a Notice of Default, the lender has to try to reach the borrower and talk through the options. If the borrower cannot be reached, the attempt has to follow a set order: a first class letter, then three phone calls at different hours on different days, then a certified letter. Thirty days after that, the Notice of Default can be recorded. A declaration goes on record with the notice saying which of three things happened: contact was made, contact was attempted and failed, or no contact was required.

These statutes are written for the mortgage servicer. A private lender who collects the payments on his own loan is his own mortgage servicer, so they reach him directly.

What the borrower alleges.

The borrower alleges she was living at the property, received no mail and no messages, and that the lender refused to communicate with her.

What the record shows.

The lender signed the declaration and checked the box for attempted contact. That declaration has to be attached to the Notice of Default, and the borrower attached it to her own complaint as Exhibit B. The lender signed it on 1/13/2026. The Notice of Default was recorded on 5/20/2026, four months later. The statute sets a minimum of thirty days. The lender waited longer than that, which complies with the statute.

Claim 2: A single point of contact (§ 2923.7)

This statute says it does not apply to a lender who services seven or fewer California loans. That is the same group the borrower’s first claim places this lender in.

What the law requires.

When a borrower asks about alternatives to foreclosure, a large servicer has to name one person or team to handle the file, give the borrower a direct way to reach them, and keep them on the file until the options run out.

What the borrower alleges.

The borrower alleges she asked for a single point of contact when she sent her modification application, and that none was ever assigned.

What the record shows.

The statute says in its own text that it does not reach a lender servicing seven or fewer California residential loans in a calendar year.

Claim 3: Notice of foreclosure alternatives (§ 2924.9)

This statute says the same thing, and it only ever applied to lenders who offer a modification program in the first place.

What the law requires.

Within five business days of recording a Notice of Default, a servicer that offers foreclosure alternatives has to send the borrower a letter saying alternatives exist, whether an application is needed, and how to get one.

What the borrower alleges.

The borrower alleges no such letter arrived.

What the record shows.

The statute says it does not apply to a lender servicing seven or fewer California loans. It also reaches only a servicer that offers foreclosure alternatives. A lender with no modification program has nothing to send.

Claim 4: Foreclosing while a modification application is pending (§ 2923.6)

California has two versions of this rule. Section 2923.6 is the one for large servicers, and it says it does not apply to small ones. Section 2924.18 is the one for small lenders, and the complaint does not use it.

What the law requires.

Under either version, a lender may not record foreclosure documents while a complete modification application is pending, until the borrower gets a written answer on eligibility. The two versions differ in what else is owed. The large servicer version adds an appeal period and a written denial letter. The small lender version requires only the written answer.

What the borrower alleges.

The borrower alleges a complete application went out on 6/24/2026, that no written answer ever came, and that the foreclosure kept moving anyway.

What the record shows.

The version pled says it does not apply to a lender servicing seven or fewer California loans. The application also came five weeks after the Notice of Default was already recorded, so it could not have blocked that recording. Under either version, the lender decides when an application is complete by naming the documents required and the deadline. The complaint does not allege the lender ever requested a document.

Claim 5: Unfair business practices (§ 17200)

This claim repeats the first four. It stands or falls with them.

What the law requires.

A business practice can be challenged as unlawful, unfair, or deceptive. Where the unlawful conduct alleged is a violation of other statutes, this claim depends on those statutes.

What the borrower alleges.

The borrower alleges the lender violated the foreclosure statutes above, made misleading statements about a payoff, and offered modifications without real help.

What the record shows.

The complaint never describes a payoff request anywhere else in its nine pages. Three paragraphs of this claim describe borrowers generally rather than this borrower.

Sections 2923.7, 2924.9 and 2923.6 each say they do not apply to a lender who services seven or fewer California loans a year. Those are Claims 2, 3 and 4.

Claim 4 is the only one that could stop the September sale, and only if the modification application is still sitting unanswered. If the lender already denied it in writing, nothing stops the sale. The complaint does not say, and neither does the record. The other four claims ask for money damages.

The borrower has a larger problem than any of this. One issue defeats all five claims at once, no matter how many loans this lender services. The evidence is three recorded documents, and the complaint never addresses what they show.

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

Read more

Abrahami v. Lenders Law Group, LLC, et al.

Court: Los Angeles County Superior Court

Filed: July 15, 2026, fifteen days before the sale date set in the recorded Notice of Trustee’s Sale. The borrower is represented by counsel.

Causes of Action: fraud, three foreclosure-procedure counts, charging interest before the loan funded, breach of fiduciary duty, negligence, breach of contract, and unfair business practices.

This is the second lawsuit over this loan. The first was filed on May 28, 2026, by a different lawyer, and we covered it here: Issue 8. The new complaint drops four of the claims from that first filing, adds five new ones, and attaches no documents.

In December 2024, the borrower took a $1,400,000 private loan secured by a Beverly Hills property that county assessor records list as four residential units. Per the recorded Deed of Trust, the loan sits in second position behind a first deed of trust recorded in 2006, with a twelve-month term and a maturity date of December 15, 2025.

The property was already in foreclosure when the borrower sought this loan. A Notice of Default was recorded against it in August 2024 on an earlier loan, and rescinded in November 2024. The complaint alleges the borrower signed the conditional offer for this loan that same month, and it does not mention the earlier foreclosure.

The borrower alleges the terms changed between that conditional offer and the documents he signed. He alleges the loan amount went from $1,300,000 to $1,400,000, the term shortened, the origination fee went from 2.5 percent to 3 percent, and the lender held back $23,255.00 as a debt service reserve covering 52 days of interest, which he alleges was not part of the loan contract. The loan contract is not attached to the complaint.

He also alleges the broker who arranged the loan was secretly the lender’s investor, that the broker directed him to send payments to her husband by Zelle, and that a $4,000 payment sent that way was never credited. He alleges the lender charged interest starting December 15, 2024 on a loan that did not fund until December 30, 2024.

On November 4, 2025, the foreclosure trustee recorded a Notice of Default. Per that notice, the loan went into default on the March 1, 2025 installment, and $225,430.25 was required to bring the account current as of October 29, 2025.

On February 6, 2026, the foreclosure trustee recorded a Notice of Trustee’s Sale, with a total estimated balance of $1,783,411.29.

On June 30, 2026, the lender recorded a Substitution of Trustee replacing the foreclosure trustee. On July 1, a Notice of Rescission cancelling the November 2025 Notice of Default was recorded. On July 2, the new foreclosure trustee recorded a Notice of Trustee’s Sale setting a sale for July 30, 2026.

The complaint’s claims, and what each one hinges on:

• The § 2924 claim: the allegation that a new Notice of Trustee’s Sale was recorded on July 2 without a new Notice of Default, and without the three-month waiting period the statute requires between the two.

• The § 2924.17 claim: the allegation that the Notice of Trustee’s Sale recorded on July 2 was not accurate, and that nobody reviewed reliable evidence before recording it, because a check of the county records would have shown the Notice of Default had been canceled the day before.

• The § 2924c claim: the allegation that the payoff figure the lender demanded was inflated, and that it did not credit the $4,000 payment.

• The pre-funding interest claim: the allegation that interest was charged for the fifteen days before the loan funded.

• Fraud, breach of fiduciary duty, and negligence: the allegation that the broker concealed being the lender’s investor, and that the loan terms changed between the offer and the closing.

• Breach of contract: the $4,000 payment the borrower says was never credited, and the $23,255.00 debt service reserve.

• Unfair business practices: the same conduct alleged in the other claims, recast as unfair business practices.

The complaint asks the court to stop the foreclosure until an accurate accounting of the loan is produced, and for damages, disgorgement, and attorney’s fees.

The notice that canceled the Notice of Default was signed by the trustee the lender had already replaced. The borrower says the foreclosure ended there, and that the lender has to record a new Notice of Default and wait three more months before it can set a sale. Whether a cancellation signed by a replaced trustee is legally significant is what decides the foreclosure issues.

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

Read more

Abrahami v. Lenders Law Group, LLC, et al.

Court: Los Angeles County Superior Court

Filed: May 28, 2026, thirteen days before the June 10 sale date the complaint references. The borrower is represented by counsel.

Causes of Action: fraud, foreclosure-notice violations, negligence, unlicensed lending, unregistered foreign companies, unfair business practices, and breach of contract.

In December 2024, the borrower took a $1,400,000 private loan secured by a Beverly Hills property that county assessor records list as four residential units. Per the recorded Deed of Trust, the loan is a second deed of trust, behind a first recorded in 2006, with a twelve-month term and a maturity date of December 15, 2025.

The borrower alleges the broker who arranged the loan presented it as a good find, and later admitted that the broker and the broker’s husband own the lender. The borrower alleges the broker directed that loan payments be sent to the broker’s husband by Zelle, and that a $4,000 payment sent by Zelle to the broker’s husband was never credited to the loan. The borrower also alleges the lender held back $23,000 in escrow without authorization in the loan contract. The loan contract is not attached to the complaint.

On November 4, 2025, the foreclosure trustee recorded a Notice of Default. Per the recorded notice, the loan went into default on the March 1, 2025 installment, and $225,430.25 was required to bring the account current as of October 29, 2025.

On February 6, 2026, the foreclosure trustee recorded a Notice of Trustee’s Sale setting a March 6, 2026 auction, with a total estimated balance of $1,783,411.29.

The borrower alleges a replacement loan was lined up to pay everything off, and that the payoff demand sent to the new lender was $1.9 million on the $1.4 million note. The complaint asks the court to stop the trustee’s sale and for damages and civil penalties.

The complaint’s claims, and what each one hinges on:

• Fraud: the allegation that the broker concealed owning the lender.

• Foreclosure-notice violations: the borrower alleges no one contacted him about his financial situation before the Notice of Default was recorded, and no one offered foreclosure alternatives after it (the § 2924.9 claim).

• Negligence, unlicensed lending, and unregistered companies: the allegation that the lender and its affiliates are out-of-state companies that never registered in California and hold no California lending license.

• Unfair business practices: the same allegations, repackaged.

• Breach of contract: the $4,000 payment the borrower says was never credited, and the $23,000 the borrower says was held back in escrow without authorization.

Per the foreclosure trustee’s published sale status, the July 27, 2026 sale has been canceled.

One of these claims will decide the case. It is not the fraud claim.

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

Read more

Papadaki v. Equity Wave Lending, Inc., et al.

Court: Santa Barbara County Superior Court

Filed: June 29, 2026, seventeen days after the sale date set in the recorded Notice of Trustee’s Sale. The borrower is represented by counsel.

Causes of Action: two federal mortgage-servicing counts (failure to provide foreclosure alternatives; failure to assign a single point of contact), wrongful foreclosure, and unfair business practices.

In March 2023, the borrower took a $245,000 loan from a private lender, secured by a Santa Barbara house she alleges is worth in excess of $2.2 million. The complaint calls it a two-year business loan secured by her principal residence. The recorded Deed of Trust is a commercial form and gives the note a maturity date of April 1, 2025.

On September 8, 2025, the foreclosure trustee recorded a Notice of Default. Per that notice, the February 1, 2025 interest installment of $2,705.21 went unpaid, the $245,000 principal became due at maturity, and $279,550.13 was required to bring the account current as of September 3, 2025.

The borrower alleges she called the lender before that, asking about foreclosure alternatives and an extension so she could refinance. She alleges the lender’s agent told her options existed, said he would call back, and did not, for six months, until the Notice of Default arrived.

Per recorded assignments attached to the complaint, the beneficial interest changed hands four times between 2025 and 2026, most recently four weeks before the scheduled sale. On May 19, 2026, a successor foreclosure trustee recorded a Notice of Trustee’s Sale setting a June 12, 2026 sale, with a total estimated balance of $457,005.00.

The complaint alleges the property sold at the auction and went back to the lender, and that the Trustee’s Deed Upon Sale has not been recorded. The borrower asks the court to block that recording, and seeks damages and civil penalties.

The website of the foreclosure trustee conducting the sale says otherwise. As of July 15, the sale has not been held. The file is marked active, with a sale date of July 17, 2026, at 12:00 p.m. and a listed bid amount of $354,451.31.

The causes of action assume one kind of loan. The loan documents attached to the complaint describe another.

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

Read more

801 Oro, LLC v. Makhlouf, et al.

Court: Los Angeles County Superior Court

Filed: June 29, 2026, about three months after the Notice of Default was recorded. The buyer is represented by counsel.

Causes of Action: fraud (concealment), negligent misrepresentation, failure to disclose, unfair business practices, wrongful foreclosure, and declaratory relief.

In February 2023, the buyer, an LLC, purchased a 12-unit apartment property in San Pedro for $3,300,000, per the MLS listing, borrowing $3,140,000 of it on a first deed of trust, per the recorded deed of trust.

Six days before the deed of trust recorded, the Los Angeles Housing Department issued the seller a Notice and Order to Comply on the property: inoperable smoke detectors, hazardous receptacles, unpermitted electrical work, plumbing leaks, and a rodent infestation, among other violations. That order is attached to the complaint. The buyer alleges the seller concealed it along with a history of tenant complaints, told the buyer the building was her “baby” in “excellent shape,” and kept the buyer’s inspector out of the problem units.

The buyer alleges the concealment inflated the price by roughly $1,500,000. It also alleges the lender funded the purchase without an appraisal and without a California lending license.

On March 19, 2026, three years into the loan, the foreclosure trustee recorded a Notice of Default stating the February 1, 2026 installment went unpaid, with $130,871.48 to cure as of March 17, 2026. Per that notice, the beneficial interest under the deed of trust is now held by the seller’s trust. The complaint does not explain how the seller came to hold the loan. It pleads that the buyer was not in default and that the buyer tendered the amount owed.

The buyer seeks damages, rescission of the purchase, an order halting the foreclosure, and modification of the loan.

Attached to the recorded Notice of Default is a declaration with a checked box the beneficiary did not need to check. It may be the strongest evidence available to the buyer, the complaint does not yet raise it, and the beneficiary signed it herself.

🔒 Paid below: which box, the exposure it created, and three lessons for lenders.

Read more

Khan v. Kiwi Fund, LLC, et al.

Court: Alameda County Superior Court

Filed: June 23, 2026, five days after the challenged sale. The borrower is representing himself.

Causes of Action: declaratory relief, quiet title and set-aside of the trustee’s sale, cancellation of instruments, accounting, violation of Civil Code § 2924.17, wrongful foreclosure, breach of the forbearance agreement, breach of implied covenant of good faith and fair dealing, intentional misrepresentation/fraudulent concealment, failure to provide servicing-transfer notice/accounting offset and injunctive relief.

The loan originated in 2017 as a bank loan secured by a single-family residence in Hayward, with an original principal of $734,650. A private lending fund later acquired it and pursued the foreclosure.

In November 2025, the trustee held a trustee’s sale. No third party bid, and the property reverted to the beneficiary on a credit bid. Per the complaint, the records the borrower points to do not show a Trustee’s Deed Upon Sale or a Notice of Rescission for that sale.

In December 2025, the parties signed a forbearance agreement. The borrower alleges the agreement recited a total balance of $781,655.12, set a schedule of four payments, and required full payoff by June 15, 2026. In effect, the lender set aside a completed sale and gave the borrower six more months.

The lender sent a notice on June 9, 2026, stating the borrower had missed the May 15 payment and terminating the forbearance. The borrower does not appear to dispute that he missed it. The trustee then held a second sale on June 18, three days after the June 15 payoff date. Again no third party bid, and again the property reverted to the beneficiary.

The borrower now contends the whole chain was defective. He alleges the November sale was never lawfully unwound, that the documentation behind the transfer of his loan and the authority to foreclose was never properly established, and that the recorded balances do not reconcile. He demands that the defendants produce the assignment history and establish the chain of title and authority to foreclose. He seeks to set aside the June sale, cancel the trustee’s deed, quiet title in his name, and obtain a full accounting.

The borrower got a canceled sale, six more months to pay, and signed a release along the way. Then he sued to undo the foreclosure. Whether any of his theory survives is what the case turns on.

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

Read more

Sandhu v. 1499 Country Club Drive, LLC, et al.

Court: Santa Clara County Superior Court

Filed: May 29, 2026, at the Notice of Default stage, before any sale date was set.

Causes of Action: Wrongful foreclosure, cancellation of instruments, negligent servicing, quiet title, and declaratory relief.

The borrower bought vacant land in Milpitas, Santa Clara County, California, to build a family home. The seller carried back most of the purchase price and holds the deed of trust, so the seller and the lender are the same party. After closing, the borrower says the utilities the marketing promised, water, power, and sewer, were never installed, and that he had to cover engineering and consulting costs out of pocket to get the lot development-ready. He says those costs are what pushed him behind on the note, and he is now in JAMS arbitration with the seller over the original misrepresentation.

Per the recorded Notice of Default, the borrower owed the full unpaid principal balance at loan maturity and had missed every installment since September 1, 2023, for a total of $1,380,020.15 as of April 1, 2026. The foreclosure trustee recorded the Notice of Default on April 3, 2026.

Then the borrower found the opening. Per a Secretary of State certificate attached to the complaint, the Franchise Tax Board had suspended the lender’s corporate powers as of June 2, 2025, ten months before the Notice of Default was recorded. The borrower contends a suspended company cannot exercise its corporate powers, that recording a foreclosure is one of them, and that the Notice of Default is void. He also alleges the foreclosure is a move to extinguish the carried-back note before a pending arbitration over the land’s condition is decided. He seeks to cancel the Notice of Default, quiet title, and stop the sale.

The borrower’s argument sounds airtight. It isn’t, quite, and the gap is where the real lesson for lenders lives.

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

Read more

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.

Read more

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?

UPDATE, June 4: The day after this published, the federal challenge to § 2924.13 was dismissed. The court did not rule on whether the statute is constitutional. It dismissed on procedural grounds, holding the Attorney General was the wrong defendant because the statute is enforced by borrowers, not the state. The complaint was dismissed without leave to amend, and the request for an injunction was denied because a jurisdictionally barred claim cannot show a likelihood of success. The statute's constitutionality remains undecided, and it remains in force. Want to read the ruling? Message us and we'll send it over.

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

Read more

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.