Every week: one real lawsuit filed over a California foreclosure, taken apart.
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.
