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Salvador Herrera et al v. Federal National Mortgage Association

May 17, 2012

SALVADOR HERRERA ET AL., PLAINTIFFS AND APPELLANTS,
v.
FEDERAL NATIONAL MORTGAGE ASSOCIATION, DEFENDANT AND RESPONDENT.



APPEAL from the Superior Court of Riverside County. Paulette D. Barkley, Temporary Judge. (Pursuant to Cal. Const., art. VI, § 21.) (Super.Ct.No. RIC542435)

The opinion of the court was delivered by: Codrington J.

CERTIFIED FOR PUBLICATION

OPINION

Affirmed.

I

INTRODUCTION

Salvador Herrera and Diana Herrera (plaintiffs) defaulted on their home loan. Federal National Mortgage Association (Fannie Mae) purchased their property at a non-judicial foreclosure sale. Plaintiffs filed suit against Fannie Mae to set aside the sale. The trial court sustained Fannie Mae's demurrer to plaintiffs' second amended complaint (SAC) without leave to amend. Plaintiffs appeal the judgment of dismissal.

Plaintiffs contend the trial court abused its discretion in sustaining Fannie Mae's demurrer to the fifth and sixth causes of action of plaintiffs' SAC, without leave to amend. Plaintiffs argue they should be permitted to amend to allege that Mortgage Electronic Registration Systems, Inc. (MERS), a nominee beneficiary, lacked authority to assign the note and deed of trust (DOT), since MERS did not have an agency agreement with IndyMac Federal Bank, F.S.B. (IndyMac Federal) or the Federal Deposit Insurance Corporation (FDIC). Plaintiffs assert that, as a consequence, MERS's assignment of the DOT and note to OneWest was void. In turn, OneWest's assignment of the DOT to Fannie Mae was void as well, and Fannie Mae could not foreclose on plaintiffs' property. Plaintiffs also contend the trial court erred in sustaining Fannie Mae's demurrer to the first cause of action for violation of Civil Code section 2932.5.*fn1

We conclude there was no abuse of discretion in sustaining Fannie Mae's demurrer without leave to amend. The courts in California have universally held that MERS, as nominee beneficiary, has the power to assign its interest under a deed of trust. Plaintiffs granted MERS such authority by signing the deed of trust. The judicially noticed documents attached to plaintiffs' SAC established a chain of title in which MERS assigned its interest to OneWest, and OneWest assigned its interest to Fannie Mae. There were no facts alleged in the SAC or raised during the hearing on the demurrer demonstrating a reasonable possibility that an amendment could cure the complaint's defects. Plaintiffs' proposed new facts raised for the first time on appeal do not require reversal, as there was no abuse of discretion in the trial court denying leave to amend.

We also conclude there was no error in sustaining the demurrer without leave to amend as to the first cause of action for violation of section 2932.5. Although the trial court previously overruled Fannie Mae's demurrer to this cause of action, this court may review and affirm the ruling if it is correct. We conclude the trial court appropriately sustained the demurrer to the first cause of action without leave to amend since section 2932.5 is inapplicable to deeds of trust. We affirm the judgment.

II

FACTS AND PROCEDURAL BACKGROUND

On August 3, 2007, plaintiffs obtained a home loan from Indymac Bank, F.S.B. (Indymac). In furtherance of the loan, plaintiffs signed a promissory note (note) agreeing to repay the loan in the amount of $318,500, plus interest. The note was secured by a DOT signed by plaintiffs. The DOT named Indymac as "Lender," First American Title Insurance Co. (First American) as trustee, and MERS as beneficiary, acting as nominee for the lender, Indymac.

The DOT specified as to the transfer of property rights to plaintiffs' home on Eric Lane in Riverside that "The beneficiary of this Security Instrument is MERS (solely as nominee for Lender and Lender's successors and assigns) and the successors and assigns of MERS. This Security Instrument secures to Lender: (i) the repayment of the Loan, and all renewals, extensions and modifications of the Note; and (ii) the performance of Borrower's covenants and agreements under this Security Instrument and the Note. For this purpose, Borrower irrevocably grants and conveys to Trustee, in trust, with power of sale, the following described property . . . ."

The DOT further states that "Borrower understands and agrees that MERS holds only legal title to the interests granted by Borrower in this Security Instrument, but, if necessary to comply with law or custom, MERS (as nominee for Lender and Lender's successors and assigns) has the right: to exercise any or all of those interests, including, but not limited to, the right to foreclose and sell the Property; and to take any action required of Lender including, but not limited to, releasing and canceling this Security Instrument."

On July 11, 2008, the assets of Indymac were transferred to FDIC, as conservator for IndyMac Federal. On March 19, 2009, IndyMac Federal was placed in receivership and IndyMac Federal's assets allegedly were sold to OneWest, "unless such asset was a Loan in which a foreclosure action began."

On June 1, 2009, MERS, as nominee beneficiary for IndyMac Federal, signed an assignment of the DOT securing plaintiffs' home loan. The assignment transferred all interest in the DOT, together with the note, to OneWest. JC San Pedro signed the assignment as "Authorized Signatory" for MERS.

On June 2, 2009, a notice of default and election to sell under the DOT (notice of default) was executed and recorded by Trustee Corps, as agent for IndyMac Federal. Plaintiffs owed $15,200.20 on their mortgage.

On July 8, 2009, OneWest executed a substitution of trustee substituting MTC Financial Inc. dba Trustee Corps (Trustee Corps) in place of First American, as trustee of the DOT. JC San Pedro signed the assignment as "Authorized Signatory" for OneWest.

Also on July 8, 2009, OneWest assigned to Fannie Mae all of OneWest's beneficiary interest in the DOT and note. JC San Pedro signed the assignment of the ...


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