The Dissent in this decision by the California Court of Appeals is a thing of beauty. CA Peng v Chase
The only party prejudiced by an illegitimate creditor-beneficiary’s enforcement of the homeowner’s debt, courts have reasoned, is the bona fide creditor-beneficiary, not the homeowner.
Such reasoning troubles me. I wonder whether the law would apply the same reasoning if we were dealing with debtors other than homeowners. I wonder how most of
us would react if, for example, a third-party purporting to act for one’s credit card company knocked on one’s door, demanding we pay our credit card’s monthly statement
to the third party. Could we insist that the third party prove it owned our credit card debt? By the reasoning of Fontenot and similar cases, we could not because, after all, we
owe the debt to someone, and the only truly aggrieved party if we paid the wrong party would, according to those cases, be our credit card company. I doubt anyone would stand
for such a thing. I think cases such as Fontenot – and their solicitude for self-proclaimed creditor beneficiaries who ask us to take on their say-so authority to foreclose on someone’s home
– are, or should be, a legacy from a bygone era. There was a time when the orderliness and regulatory oversight of the mortgage industry perhaps justified a presumption that
creditor-beneficiaries acted lawfully when they enforced a homeowner’s debt. In those days, courts excused mortgage lenders from proving their authority because we trusted
they acted properly, and we presumed that a homeowner’s challenge was typically a delaying tactic to avoid a valid foreclosure. (See e.g. Siliga v. Mortgage Electronic Registration Systems, Inc. (2013) 219 Cal.App.4th 75, 82 [“California courts have refused to allow [homeowners] to delay the nonjudicial foreclosure process by pursuing preemptive judicial actions challenging the authority of a foreclosing ‘beneficiary’ or beneficiary’s ‘agent.’ ”]; Jenkins v. JPMorgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497, 511-512 [same].)
I think the old presumption no longer withstands the press of current events.