Nonjudicial Foreclosure: Preemptive Actions Dissallowed

  Once again a Court of Appeals affirms the trial court’s ruling sustaining a demurrer without leave to amend of a homeowners’ complaint which challenged the MERS registration system and the assignment of the underlying note by MERS.

  In Siliga v. Mortgage Electric Registration Systems the court easily disposed of the homeowners’ claims. It specifically held that trustors may not delay the nonjudicial foreclosure process by pursuing preemptive judicial actions which challenge the authority of a foreclosing beneficiary or beneficiary’s agent.

  An action is “preemptive” if the complaint fails to allege a specific factual basis for the claim that the foreclosure was not initiated by the correct entity. An preemptive suit does not seek a remedy for specified misconduct which may provide a basis for a valid cause of action. “Instead, a preemptive suit seeks to create an additional requirement for the foreclosing party, apart from the comprehensive statutory requirements, by requiring the foreclosing party to demonstrate in court that it is authorized to initiate a foreclosure.  Allowing the homeowner to pursue such an action without a specific factual basis for the allegation that the foreclosure was not initiated by the correct party would unnecessarily interject the courts into the comprehensive nonjudicial foreclosure scheme and is inconsistent with the policy behind nonjudicial foreclosure of providing beneficiaries of a quick, inexpensive and efficient remedy.”

  The Siligas’ complaint was defective because it failed to allege: 1) Any facts supporting the conclusory allegation that MERS lacked authority to assign the note to the foreclosing beneficiary, or any lapse in that authority; 2) Any prejudice resulting from any lack of authority of any party that participated in the foreclosure process.


  Michael Daymude consults with clients and accepts cases involving nonjudicial foreclosure, including claims for injunctive relief and wrongful foreclosure. For other types of cases accepted, please scroll the Home and My Practice pages. If you are seeking a legal consultation or representation, call Michael at 818.971.9409.

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