Based on various federal and state court opinions that blurred the distinction between mortgages and deeds of trust, the borrower unsuccessfully argued that the purpose of Section 2932.5 is to allow borrowers to identify the holder of their loans. The Court of Appeal noted that, contrary to the Borrower's assertion, "Section 2932.5 requires the recorded assignment of a mortgage so that a prospective purchaser knows that the mortgagee has the authority to exercise the power of sale," and that "[t]his is not necessary when a deed of trust is involved, as the trustee conducts the sale and transfers title."
The Court further observed that applying Section 2932.5 to deeds of trust would effectively transfer the power of sale to the lender, contrary to the terms of the trust deed and the state statutory requirements for transferring the power of sale to a different trustee.
In confirming that Section 2932.5 applied only to mortgages, the Court concluded that because title transfers to the trustee under a deed of trust, and thus enables the trustee to transfer marketable record title to a purchaser, there was no requirement to record an assignment to the note holder prior to the initiation of the non-judicial foreclosure of the deed of trust.
Ralph T. Wutscher
McGinnis Tessitore Wutscher LLP
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