Facts

Shala Shakibaei sued Yanwen Chen, First American Title Insurance Co., and Wells Fargo Bank NA, seeking to void the trustee's deed upon sale and deed of trust.

PLAINTIFF'S CONTENTIONS:
On July 26, 2007, plaintiff's spouse entered into a Home Equity Conversion Mortgage with Wells Fargo that was secured by a deed of trust on a residence located in Rosemead. Plaintiff alleges she knew nothing about the HECM or the HECM Trust Deed until after her husband passed away on March 5, 2014. She did not repay the amounts her husband borrowed, and the property was sold at a trustee's sale to Chen. Plaintiff contended that the HECM program's anti-displacement provisions prohibited the sale, and that she had a community property interest in the property. Plaintiff asserted causes of action to invalidate the trustee's deed upon sale and deed of trust.

DEFENDANTS' CONTENTIONS:
Wells Fargo filed a demurrer challenging the sufficiency of plaintiff's allegations. Chen joined in the demurrer. As to the first cause of action, Wells Fargo argued that plaintiff was relying on regulations that were inapplicable to mortgage servicers, and that the property went to sale as required and allowed by the HECM program and HECM Trust Deed. As to the second cause of action, Wells Fargo argued that the husband was the sole owner of record, and that a transmutation to community property was unenforceable against third parties because notice of transmutation was never recorded, as required by Family Code § 852(b). Wells Fargo also argued that a claim to invalidate the HECM Trust Deed was time-barred, and that the HECM Trust Deed could not be canceled without a tender of the indebtedness.

Result

The court sustained Wells Fargo's demurrer without leave to amend as to the first cause of action, but with leave as to the second.

Other Information

FILING DATE: May 3, 2016.