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Assignment of California Deed of Trust Must Be Recorded Before Foreclosure- MERS Process Does Not Trump California Real Estate Law

A recent California bankruptcy court decision ( In re: Eleazar Salazar ) found a foreclosure invalid because of failure to record an assignment of the Deed of Trust. In the original Deed of trust (DOT) Accredited was the lender, Chicago Title was the trustee, and MERS was the nominal beneficiary. The DOT stated that MERS only held legal title to the interests granted by the borrower.

After the borrower defaulted, MERS signed a substitution of trustee and had no apparent role in the trustee’s sale. The sale was apparently run by Litton Loan Servicing and Quality Loan Service Corp. The Trustee’s Deed Upon Sale identified US bank as the “foreclosing beneficiary”, not MERS. The recital in the trustee’s deed is presumed to be true. While MERS was the beneficiary at the inception of the loan, it was not at time of foreclosure. In addition, no assignment of Accredited’s interest to US Bank was recorded. Facts like these make experienced real estate attorneys sit up and take notice.

The court noted that under California Civil Code section 2932.5 , the assignment to US Bank had to be recorded prior to sale. First, US Bank had to be entitled to payment of the secured debt to foreclose, and secondly, the public record must show US Bank’s status as foreclosing beneficiary before the sale occurs.

Though US bank claimed to be the holder of the note, satisfying the first condition, it did not record an assignment of its interest in the Deed of Trust, failing the second condition.

US Bank also argued that MERS status as ‘nominal beneficiary’ made recording of the assignment unnecessary. However, MERS was not beneficiary at the time of the foreclosure, and the deed of trust did not grant MERS more then nominal powers. US Bank was described in the trustee’s deed (which is presumed to be true) as the foreclosing beneficiary. So, MERS had no role in the foreclosure.

Lastly, US Bank argued that the assignment from Accredited to US bank could be tracked in the publicly accessible MERS system. The court refused to recognize MERS as an extra-judicial foreclosure alternative which can circumvent the public recordation system .

Bankruptcy courts in California have more readily addressed the arrogance of the MERS cabal of lenders efforts to circumvent state law. California state courts have been more reluctant, at least in published decisions. On the one hand, this is unfortunate, as it forces more borrowers into Bankruptcy. On the other hand, bankruptcy law provides more tools to reconfigure the parties relationships once a foreclosure sale is set aside.

IMAGES

  1. CA All-Inclusive Deed of Trust and Assignment of Rents

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  2. Deed Of Trust California

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  3. Assignment of Deed of Trust

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  4. CA Deed of Trust with Assignment of Rents

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  5. California Deed of Trust

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COMMENTS

  1. PDF This Space for Recorder'S Use Assignment of Deed of Trust

    FOR VALUE RECEIVED, the undersigned hereby grants, assigns and transfers to. all beneficial interest under that certain Deed of Trust dated executed by. to and recorded as Instrument No. Recorder's office of. on. , as Trustor , Trustee , of Official Records in the County County, California. Describing land therein as (insert legal description):

  2. A Deed of Trust can be Assigned Apart from the Note, and that often

    A typical assignment of the Deed of Trust alone will purport to assign "all beneficial interest under that certain Deed of Trust dated xyz.." But the long-established law in California is clear: the beneficial interest under a Deed of Trust is held by the party who holds the Note (or is entitled to enforce it), without regard to the ...

  3. California Assignment of Deed of Trust Forms

    This is often done when a Deed of Trust has been sold. This allows the new Lender the right to collect payments of the debt. A typical Deed of Trust contains a Power of Sale clause, allowing a non-judicial foreclosure. (The power of sale may be exercised by the assignee if the assignment is duly acknowledged and recorded.) (California Code 2932.5)

  4. PDF Assignment of Deed of Trust

    ASSIGNMENT OF DEED OF TRUST. FOR VALUABLE CONSIDERATION, the undersigned hereby grants, assign, and transfers to all beneficial interest under that certain Deed of Trust dated by to as Trustee, and recorded , in Book/Reel , at Page/Image , Series Number of Official Records of County, California, together with the Promissory Note secured by said ...

  5. PDF Deed of Trust Short Form

    SHORT FORM DEED OF TRUST AND ASSIGNMENT OF RENTS. ORDER NO. The following is a copy of provisions (1) to (14), inclusive, of the fictitious deed of trust, recorded in each county in California, as stated in the foregoing Deed of Trust and incorporated by reference in said Deed of Trust as being a part thereof as if set forth at length therein.

  6. PDF Long Form Deed of Trust and Assignment of Rents

    All sums secured by said Deed of Trust have been fully paid and satisfied; and you are hereby requested and directed, on payment to you of any sums owing to you under the terms of said Deed of Trust, to cancel all evidences of indebtedness, secured by said Deed of Trust, delivered to you herewith together with said Deed of Trust, and to ...

  7. PDF ASSIGNMENT OF DEED OF TRUST

    ASSIGNMENT OF DEED OF TRUST. FOR VALUE RECEIVED, the undersigned assigns, and transfers to Deed of Trust dated executed by. hereby grants, all beneficial interest under that certain , Trustor, to , Trustee, and recorded as instrument no. official records in the County Recorder's Office of. of California, describing land therein as:

  8. Free California Deed of Trust Form

    Updated July 17, 2023. A California deed of trust is a deed used in connection with a mortgage loan. It is the deed that shows that the lender has an interest in the property while the landowner is paying the mortgage. A short form deed of trust for use in typically smaller and non-institutional loans secured by any type of real property (commercial and residential) located in California.

  9. PDF All-inclusive Deed of Trust With Assignment of Rents (Long Form)

    as Beneficiary herein. In this All-Inclusive Deed of Trust, whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number includes the plural. 9) That Trustee accepts this Trust when this All-Inclusive Deed of Trust, duly executed and acknowledged, is made a public record as provided by law.

  10. Section 2934

    Section 2934 - Recordation of assignment of mortgage or beneficial interest under deed of trust. Any assignment of a mortgage and any assignment of the beneficial interest under a deed of trust may be recorded, and from the time the same is filed for record operates as constructive notice of the contents thereof to all persons; and any instrument by which any mortgage or deed of trust of, lien ...

  11. California Blank Documents

    Deed of Trust - Assignment of Rents / Due on Sale. (for use with Note containing Due on Sale provision) MS Word. PDF. Request for Copy of Notice of Default. MS Word. PDF. Request for Notice of Delinquency. MS Word.

  12. PDF Short Form Deed of Trust and Assignment of Rents This Deed of Trust

    CR-5 (05/18) SHORT FORM DEED OF TRUST - APPENDIX Page 3 of 4 DO NOT RECORD The following is a copy of Subdivisions A and B of the fictitious Deed of Trust recorded in each county in California as stated in the foregoing Deed of Trust and incorporated by reference in said Deed of Trust as being a part thereof as if set forth at length therein. A.

  13. California Deed of Trust

    The California Deed of Trust — Assignment is a legal document that allows for the transfer of ownership and obligations of a property secured by a deed of trust. This assignment document is used in California to facilitate the transfer of a debt obligation from the original lender to a new lender, or from one party to another. ...

  14. DOC Los Angeles

    ÐÏ à¡± á> þÿ L N ...

  15. PDF ASSIGNMENT OF DEED OF TRUST

    Recorder's office of _____, County, California, as described in said deed of trust, together with the note or notes therein described or referred to, the money due and to become due thereon with interest, and all rights accrued or to accrue under said Deed of Trust.

  16. Orange County Assignment of Deed of Trust Forms (California)

    Generally, within 30 days to avoid up to $2,000.00 in statutory damages, plus reasonable attorney's fees. Systematic violations can reach up $500,000.00. (California Assignment of Deed of Trust Package includes form, guidelines, and completed example) For use in California only. The documents you receive here will meet, or exceed, the Orange ...

  17. Deed Of Trust: What It Is And How It Works

    Deed of Trust. Both a warranty deed and deed of trust are used to transfer the title of a property from one person to another. However, the difference between these two contracts is who is ...

  18. Sacramento County Assignment of Deed of Trust Forms (California)

    The current Lender/Beneficiary uses this form to assign a Deed of Trust to another lender. This is often done when a Deed of Trust has been sold. This allows the new Lender the right to collect payments of the debt. A typical Deed of Trust contains a Power of Sale clause, allowing a non-judicial foreclosure. (The power of sale may be exercised ...

  19. PDF Title Order No. Escrow No. ASSIGNMENT OF DEED OF TRUST

    California, describing land therein as: TOGETHER with the note or notes therein described or referred to, the money due and to become due thereon with interest, and all rights accrued or to accrue under said Deed of Trust. Dated _____ STATE OF CALIFORNIA, COUNTY OF _____} S.S.

  20. PDF California Short Form Deed of Trust

    The following is a copy of provisions (1) to (14), inclusive, of the fictitious deed of trust, recorded in each county in California, as stated in the foregoing Short Form Deed of Trust and Assignment of Rents and incorporated by reference in this instrument as being a part thereof as if set forth at length therein. To Protect the Security of ...

  21. San Benito County Assignment of Deed of Trust Forms (California)

    The current Lender/Beneficiary uses this form to assign a Deed of Trust to another lender. This is often done when a Deed of Trust has been sold. This allows the new Lender the right to collect payments of the debt. A typical Deed of Trust contains a Power of Sale clause, allowing a non-judicial foreclosure. (The power of sale may be exercised ...

  22. Assignment of California Deed of Trust Must Be Recorded Before

    A recent California bankruptcy court decision (In re: Eleazar Salazar) found a foreclosure invalid because of failure to record an assignment of the Deed of Trust.In the original Deed of trust (DOT) Accredited was the lender, Chicago Title was the trustee, and MERS was the nominal beneficiary. The DOT stated that MERS only held legal title to the interests granted by the borrower.