CALIFORNIA COURT OF APPEALS HOLDS THAT MINOR MINISTERIAL OMISSIONS IN FORECLORES SHOULD NOT INVALIDATE A NON-JUDICIAL FORECLOSURE.

After a wave of court holdings in every state making it more difficult for lenders to foreclose, a California Court of Appeals has held that the omission of naming a trustee in a deed of trust does not invalidate a non-judicial foreclosure sale. In the same decision it was also held that a lender’s failure to hold an original promissory note should not be the grounds to invalidate a non-judicial foreclosure. Shuster v. BAC Home Loan Servicing, L.P. (2012) 211 Cal. App, 4th 505.

Most important to the lending industry should be the court’s finding that:

“We are mindful that foreclosures are a far to frequent occurrence in today’s difficult financial times. But the hardship must not become a haven for those who, as here, do not appear to make any good faith effort to resolve the issue, but instead, seek shelter in minor ministerial omissions or speculative acts that neither misled nor prejudiced them.”

As over 30% of lawsuits in some California counties now relate to borrowers challenging foreclosures, the court’s holding in this case – especially if appealed and upheld by the California Supreme Court – may have a large effect on disposition of those cases now clogging the court system.

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