November 12, 2013
Wrongful Foreclosure Claim Survives Motion to Dismiss
Judge Conti (N.D. Cal.) issued an order granting in part and denying in part a motion to dismiss in Subramani v. Wells Fargo Bank N.A. et al., No. 13-1605 (Oct. 30, 2013).
Plaintiff Subramani received a mortgage loan from Defendant Wells Fargo secured by a deed of trust (DOT). Subramani alleges (and these allegations are taken to be true for the purposes of a motion to dismiss) that Wells Fargo sold the loan in 2006 to an affiliate and that it was ultimately bundled with other mortgages into a mortgage-backed security. Subramani later defaulted on the loan and the home was sold at foreclosure.
Subramani contends that documents relating to the foreclosure were void because Wells Fargo “was no longer the valid lender in the DOT, or even an agent of a successor beneficiary after it sold the Loan in 2006 . . .. Plaintiff therefore states that after Defendant sold the Loan, neither Defendant nor anyone else had any right to or interest in the Loan, so all legal notices associated with the note and DOT — including the SOTs [substitutions of trustee] , NODs [notice of defaults], and the foreclosure sale itself — are illegal and void.” (4, citations omitted)
The Court found that at the motion to dismiss stage, Subramani “has sufficiently stated a claim for wrongful foreclosure based on his allegations that Defendant’s 2006 sale of Plaintiff’s DOT precluded Defendant from retaining a beneficial interest in the DOT. Plaintiff has sufficiently alleged that Defendant directed the wrong party to issue Notices of Default, that Defendant is not the true beneficiary, and that Defendant failed to abide by the rules regarding transference of the Loan.” (8, citations omitted)
[HT April Charney]
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