GORDON v. Old Republic Default Management Services; Quality Loan Service Corporation, Defendants. (2021)

United States Court of Appeals, Ninth Circuit.2021-08-10No. No. 20-55850

Summary · law.co

Holding. The court affirmed the district court's grant of summary judgment, holding that the servicers corrected any dual-tracking violation prior to recordation of a trustee's deed and that the borrower received timely and valid notice of the loan transfer as required by federal law.

Shawn Gordon sued loan servicers for violating California's dual-tracking prohibition and federal lending disclosure requirements. The servicers had initiated foreclosure while Gordon sought a loan modification, but they ultimately paused foreclosure proceedings, rescinded default notices, and considered his modification applications before resuming collection efforts. The district court granted summary judgment for the defendants, and this court affirmed on both claims.

Regarding the state law claim, even assuming the servicers engaged in prohibited dual tracking, California law permits enforcement only until the servicer corrects and remedies the violation before recording a trustee's deed. Because the defendants never completed the foreclosure, rescinded notices, and suspended proceedings while evaluating Gordon's modification requests, they adequately corrected the violation. As to the federal claim, Gordon received timely notice of the loan's transfer to the new owner, satisfying the Truth in Lending Act's 30-day notification requirement, and the fact that the notice came from an agent rather than the creditor itself does not render the notice invalid.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

Whether pausing foreclosure and rescinding default notices constitutes adequate correction of dual-tracking violations under California Civil Code § 2923.6
Whether notice of loan transfer satisfies TILA requirements when provided by an agent of the new creditor rather than the creditor itself
Enforceability of state law dual-tracking claims after servicer remediation

Procedural posture

Gordon appealed the district court's grant of summary judgment in favor of the loan servicers on his state and federal lending law claims.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

MEMORANDUM **

In this action, Shawn Gordon claims that the servicers of his home loan secured by a deed of trust violated California Civil Code § 2923.6 and the Federal Truth in Lending Act (“TILA”), 15 U.S.C. § 1641(g). The district court granted summary judgment to the defendants. We have jurisdiction under 28 U.S.C. § 1291 and affirm.

1. Like the district court, we assume without deciding that the defendant loan servicers engaged in dual tracking in violation of § 2923.6 by seeking to foreclose on Gordons home while he attempted to modify his loan. But § 2924.12 permits a borrower to enforce violations of § 2923.6 until the servicer has “corrected and remedied” the violation “prior to the recordation of the trustees deed upon sale.” Id. § 2924.12(b). The defendants never foreclosed on the property and rescinded all prior notices of default after Gordon sought modification of his loan. The defendants paused all foreclosure procedures while they considered Gordons applications and issued final determinations on those applications before resuming foreclosure activities. See Berman v. HSBC Bank USA, N.A., 11 Cal. App. 5th 465, 473, 217 Cal.Rptr.3d 674 (2017). The district court therefore correctly rejected Gordons state law claim.

2. Gordon claims that the defendants violated the TILA requirement that a creditor notify a borrower of any change in his loans ownership within 30 days. 15 U.S.C. § 1641(g)(1). It is undisputed, however, that he received timely notice that the Truman Trust purchased his loan from U.S. Bank in 2018. Gordon argues that the notice was invalid because it came from an agent who had not yet begun servicing his loan, and that only “the creditor” may send such a notice. Id. But, the TILA provides only that “the creditor that is the new owner or assignee of the debt” must provide the notice within 30 days of the loan being “sold or otherwise transferred.” Id. The district court correctly held that because Gordon timely received the required notice, his TILA claim fails.

AFFIRMED.