Can a borrower bring a preemptive action to challenge an entity’s authority to foreclose?This question was not yet resolved by the California Supreme Court. First, some courts have held that borrowers cannot bring a preemptive action to challenge an entity’s authority to foreclose, reasoning that these actions would “’fundamentally undermine the nonjudicial nature of the process and introduce the possibility of lawsuits filed solely for the purpose of delaying valid foreclosures.’ ” (Jenkins v. JPMorgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497, 512, citing Gomes v. Countrywide Home Loans, Inc., supra, 192 Cal.App.4th at p. 1152; accord Saterbak v. JPMorgan Chase Bank, N.A. (2016) 245 Cal.App.4th 808, 814-815.) Our state Supreme Court recently expressly declined to address the validity of these holdings. (Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, 934.)
Second, even assuming that borrowers can bring such a preemptive action, a question remains whether they have standing to stop a pending foreclosure by alleging that an assignment of a deed of trust was void. Yvanova concluded that a borrower whose home is sold in foreclosure by an entity that received its ostensible authority through a void assignment suffers a sufficient injury for purposes of standing even though the borrower is not a party to the assignment. (Yvanova v. New Century Mortgage Corp., supra, 62 Cal.4th at pp. 935-937, 942-943.) Although Yvanova limited its holding to the post-sale context, its determination that borrowers have standing after a foreclosure sale to allege that the assignment of a deed of trust was void raises the distinct possibility that our state Supreme Court would conclude that borrowers have a sufficient injury, even if less severe, to confer standing to bring similar allegations before the sale. (Cf. Saterbak v. JPMorgan Chase Bank, N.A., supra, 245 Cal.App.4th at p. 815 [borrower lacked standing to bring preemptive suit where alleged defect in assignment rendered it only voidable, not void].) Brown v. Deutsche Bank National Trust Company, 2016 S.O.S. 2376.