Homeowner Who Defaults On His Mortgage Has No Legal Authority To Bring Lawsuit To Determine If The Party Had Legal Authority To Initiate Foreclosure

In Gomes v. Countrywide Home Loans, Inc., (— Cal.Rptr.3d —-, Cal.App. 4 Dist., February 18, 2011), a California Court of Appeal considered whether a homeowner who defaulted on his mortgage could file a lawsuit questioning the legal authority of the party who initiated the foreclosure. The court ruled that California’s nonjudicial foreclosure laws, set forth in Civil Code sections 2924 through 2924k, do not provide authority to bring lawsuits to challenge the foreclosure proceedings and the trial court correctly dismissed the suit.


In 2004, Jose Gomes (“Gomes”) borrowed $331,000 to finance the purchase of real estate. By 2009, he had defaulted on his loan payments and was mailed a notice of default and election to sell. The notice was sent to Gomes by Mortgage Electronic Registration Systems, Inc. (“MERS”), and was accompanied by a declaration signed by an employee of Countrywide Home Loans (“Countrywide”), the loan servicer.

Gomes filed suit against Countrywide and MERS alleging “Wrongful Initiation of Foreclosure,” and that MERS did not have the authority to initiate the foreclosure. He also alleged that Section 2924 allows a borrower, before his property is sold, to bring a civil action in order to test whether a party seeking to sell the property is authorized to do so.

Countrywide and MERS filed for a demurrer claiming that California’s nonjudicial foreclosure statutes do not authorize such a lawsuit. The trial court sustained the demurrer and Gomes appealed.


Reviewing the language and judicial history of sections 2924 through 2924k, the court noted that these provisions “cover every aspect of exercise of the power of sale contained in a deed of trust,” citing I.E. Associates v. Safeco Title Ins. Co. (1985) 39 Cal.3d 281. Additionally, the court noted that because of the exhaustive nature of the law, courts have refused to read any additional requirements into the nonjudicial process.

Gomes attempted to interject judicial proceedings into the process without identifying such authority. The court ruled that “Nothing in the statutory provisions establishing the nonjudicial foreclosure process suggests that such a judicial proceeding is permitted or contemplated.”

Civil Code section 2924 provides that a “trustee, mortgagee, or beneficiary, or any of their authorized agents,” may initiate a foreclosure, as happened here. “However, nowhere does the statute provide for a judicial action to determine whether the person is indeed authorized, and we see no ground for implying such an action,” the court said.

Furthermore, Gomes specifically agreed in his deed of trust that “MERS (as nominee for Lender and Lender’s successors and assigns) has … the right to foreclose and sell the Property,” the court noted. That language establishes as a factual matter that Gomes’ claim lacks merit, the court said. The trial court properly sustained the demurrer and the judgment was affirmed.


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