Every week: one real lawsuit filed against a California private lender, taken apart.
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.
