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 alleged dual-tracking violation under state law prior to foreclosure sale and that Gordon received timely notice of the loan transfer satisfying federal disclosure requirements.

Shawn Gordon borrowed money secured by a deed of trust on his home and later sought to modify the loan terms. Gordon sued the loan servicers, alleging they violated California's anti-dual-tracking statute and federal lending disclosure requirements. The servicers responded by pausing foreclosure proceedings, reconsidering Gordon's modification applications, and ultimately rescinding prior default notices. Gordon claimed the servicers had violated state law by pursuing foreclosure while he sought modification, and that they failed to timely notify him of a change in loan ownership under federal law.

The district court granted judgment in favor of the servicers. On appeal, the court assumed the servicers may have engaged in problematic dual-tracking conduct but found that state law allowed Gordon to sue only if the servicer failed to correct the violation before the trustee's deed was recorded. Because the servicers halted foreclosure, rescinded notices, and paused collection efforts while reviewing the loan modification applications, they corrected any violation before reaching the foreclosure sale stage. Regarding the federal claim, Gordon received timely notice of the loan's transfer to a new owner, satisfying the statutory requirement regardless of which party's agent delivered the notice.

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

Key issues

Whether loan servicers' foreclosure activities violated California's anti-dual-tracking statute when they paused proceedings and rescinded notices during loan modification review
Whether the timing and source of ownership-transfer notice complied with federal Truth in Lending Act disclosure requirements
Whether a borrower may enforce anti-dual-tracking violations after a servicer has remedied the conduct prior to trustee's deed recordation

Procedural posture

Gordon appealed the district court's summary judgment decision 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.