A private lender replaced its foreclosure trustee. The old trustee recorded a cancellation notice anyway, and the borrower built a lawsuit on it.
A $1,400,000 second-position loan in Beverly Hills, a borrower on his second lawsuit in seven weeks, and a foreclosure he says restarted illegally.
This week's case: a $1,400,000 private loan in default, a borrower who has now sued his lender twice in seven weeks, and a second complaint that leaves out the recorded document answering its main claim.
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 A Notice of Default was recorded against it in August 2024 on an earlier loan, and rescinded in November 2024.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.
