Every week: one real lawsuit filed over a California foreclosure, taken apart.
The File
Case: Bertha Fregoso v. Shellpoint Mortgage Servicing
Court: Santa Clara County Superior Court
Filed: August 12, 2026. Represented by counsel.
Property: Single-family property, San Jose.
Loan: First lien, adjustable rate. $525,000, recorded December 2005, matures December 15, 2035.
Claims: Five. Failure to contact before a Notice of Default, no single point of contact, no foreclosure-alternatives notice, recording a sale while a modification was pending, unfair business practices.
Relief sought: An injunction to stop the trustee’s sale, an order vacating the Notice of Trustee’s Sale, statutory penalties, damages.
Exhibits attached: Five. The deed of trust, three recorded assignments, and the Notice of Default with its attached compliance declaration.
The Timeline
12/7/2005. A $525,000 deed of trust records, signed one week earlier for a loan from World Savings Bank naming two borrowers, Bertha Fregoso and Yesenia Rodriguez. Only Fregoso is a party to this suit. The loan matures December 15, 2035.
11/30/2016. An assignment records, moving the beneficial interest to a legal title trust.
3/6/2019. A second assignment records, moving the beneficial interest to Ajax Mortgage Loan Trust 2018-F.
11/8/2021. A third assignment records, moving the beneficial interest to Ajax Mortgage Loan Trust 2021-D, the current beneficiary.
3/2/2026. The Notice of Default records. It states an installment due in October 2025 went unpaid, with $31,541.52 needed to cure.
5/4/2026. Fregoso alleges she submitted a complete loan modification application and requested a single point of contact.
8/12/2026. The complaint is filed. It alleges the trustee’s sale is still set for August 20, 2026.
8/21/2026. The Notice of Trustee’s Sale records, executed the day before, eight days after the complaint was filed. It sets the sale for September 16, 2026, not August 20.
9/23/2026. Per the trustee’s published sale-status page, the sale has been postponed to November 2, 2026 and has not occurred.
The Money
$525,000.00. Original loan amount, per the deed of trust recorded December 7, 2005.
$31,541.52. Arrears stated on the Notice of Default, as of March 2, 2026.
$769,569.86. Estimated unpaid balance and other charges, per the Notice of Trustee’s Sale dated August 20, 2026, the same figure the trustee’s status page still shows.
Claim 1. Failure to Contact Before a Notice of Default (§ 2923.5)
Section 2923.5 applies only to a servicer handling seven or fewer California residential loans in a calendar year, or a licensee under a separate 175-foreclosure ceiling. The next three causes of action rely on sections that exclude that same category of servicer.
What the statute requires
Before recording a Notice of Default, a small servicer must contact the borrower, or satisfy a five-step due diligence process, and attach a declaration to the Notice of Default stating which occurred. Section 2923.5(g) states the section applies “only to entities described in subdivision (b) of Section 2924.18,” the small-servicer definition.
What the borrower alleges
She alleges she was living in the home when the Notice of Default recorded March 2, 2026, that she received no mail or messages, that Shellpoint refused to communicate with her, and that this violated § 2923.5(a)(2).
What the record shows
The Notice of Default carries an attached Declaration of Compliance. It checks the box stating the servicer tried with due diligence to contact the borrower, did not make contact, and that thirty days had passed since those efforts. The declaration itself is captioned "California Declaration of Compliance, Civil Code § 2923.55(c)," the form for a large servicer, not the § 2923.5 form this cause of action is brought under.
Claim 2. Failure to Assign a Single Point of Contact (§ 2923.7)
Section 2923.7 excludes any servicer handling seven or fewer California residential loans, the same category the first cause of action requires.
What the statute requires
Once a borrower requests a foreclosure prevention alternative, the servicer must promptly assign a single point of contact, an individual or a team, with authority to communicate the process, coordinate documents, and stop the foreclosure when necessary.
What the borrower alleges
She alleges she submitted a complete loan modification application on May 4, 2026, requested a single point of contact, and that none was assigned within a reasonable time.
What the record shows
No correspondence, servicing note, or assignment of a contact is attached to the complaint. Nothing in the filing shows what happened after the alleged May 4 request.
Claim 3. Failure to Provide a Foreclosure Alternatives Notice (§ 2924.9)
Section 2924.9 also excludes small servicers, and even where it applies, the duty runs only to a servicer that offers a foreclosure prevention alternative program.
What the statute requires
Within five business days of recording a Notice of Default, a servicer that offers one or more foreclosure prevention alternatives must send the borrower a written notice describing them and how to apply.
What the borrower alleges
She alleges she received no calls or mail about alternatives, and that she asked for a reinstatement figure but was told to show proof of funds first.
What the record shows
No correspondence is attached either way, and the complaint does not allege that Shellpoint offers a modification program, which the statute treats as a separate requirement from the five-day deadline.
Claim 4. Recording a Sale While a Modification Was Pending (§ 2923.6(c))
This subdivision does not apply to a small servicer either. The sale date the claim depends on is also not the one the recorded Notice of Trustee’s Sale sets.
What the statute requires
If a borrower submits a complete loan modification application at least five business days before a scheduled sale, the servicer cannot record a notice of sale or hold a sale while it is pending, until a written determination issues.
What the borrower alleges
She alleges her application, submitted May 4, 2026, was still pending when the trustee’s sale was “still to take place on 8-20-26,” with no written determination provided.
What the record shows
No Notice of Trustee’s Sale existed when this complaint was filed on August 12, 2026. The only one on file for this loan is dated August 20, 2026 and recorded the next day. It sets the sale for September 16, 2026, not August 20. That sale has since been postponed to November 2, 2026.
Claim 5. Unfair Business Practices (Bus. & Prof. Code § 17200 et seq.)
This claim repeats the same four violations above under an unfair-practices theory, and adds a statute that names no cause of action anywhere else in the complaint.
What the statute requires
A claim under the unfair competition law covers business practices that are unlawful, unfair, or fraudulent.
What the borrower alleges
She alleges Shellpoint runs a “severely flawed” loss mitigation process built to delay modification decisions, and that it “purposely violated” §§ 2923.5, 2923.6, 2923.7, 2924.11, and 2924.9.
What the record shows
Section 2924.11 does not appear as its own cause of action anywhere else in the complaint. No document independent of the other four claims supports the delay allegation.
🔒 Paid below: the takeaway and three lessons for lenders.
