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Court Denies a Borrower’s Challenge to Foreclosure of a Secured Loan

Foreclosure Litigation, Real Estate Law, and Real Estate Law Litigation by Peter N. Brewer, Esq.

In Jenkins v. JP Morgan Chase Bank, N.A., the Court affirmed a lower court’s decision dismissing a borrower’s challenge to a foreclosure sale based on securitization of her loan.  In reaching its decision to dismiss the plaintiff’s complaint the Court relied on multiple independent grounds.  Accordingly, it is unlikely that this argument, or any other variation of the “produce-the-note” argument, will succeed in California.


In Jenkins, the debtor received a loan from Washington Mutual Bank (“WaMu”) in the amount of $375,500.  Within a year of getting the loan, Jenkins sought to refinance her loan but was unable to get any assistance from WaMu for the next two years.  Jenkins alleges that eventually a WaMu employee advised her to default on her loan so she could qualify for a loan modification at a reduced interest rate.  Jenkins thereafter defaulted on her loan and foreclosure proceedings began.  During the time that Jenkins was seeking to refinance her loan, WaMu collapsed and was seized by the Office of Thrift Supervision (“OTS”).  Eventually, the OTS sold WaMu’s assets, but not the liabilities, to Chase Bank.  There were complicated securitization agreements associated with this sale.

When Chase initiated foreclosure proceedings Jenkins filed suit, alleging, among other causes of action, that Chase could not foreclose because it had improperly securitized the loan and no longer had a security interest in the property.


As with other variants of the “produce-the-note” argument, the lower court dismissed Jenkins case on the grounds that it had no merit.  The appellate court noted that California law does not allow a borrower to preemptively challenge a beneficiary’s (lender’s) right to foreclose.  The Court affirmed previous appellate decisions that held similarly and noted that the nonjudicial foreclosure statutes would be rendered meaningless if a borrower could force a beneficiary (lender) to prove in court its right to foreclose.  It further noted that a borrower only has a right to challenge a foreclosure if there are allegations of actual wrongdoing integral to the foreclosure.  In addition to finding that the statute does not allow for a preemptive challenge, the Court reaffirmed a previous appellate court decision that a lender is not required to have possession of the promissory note in order to foreclose.

As an alternate ground for dismissing, the Court found that even if Jenkins was correct that the loan was not properly secured, Jenkins would not be able to sue on those grounds because she was not a party to the securitization agreements between the OTS and Chase.


While various forms of the “produce-the-note” argument have received considerable media attention, California courts have continually found no merit to those arguments.  Just as attacking the securitization of the loan is merely an offshoot of that argument, it is no surprise that the appellate courts have also struck down that argument.  Although California Courts have become more amenable to debtor’s allegations of wrongdoing, the arguments attacking the chain of ownership transfers continue to be ineffective.

At Brewer Offord & Pedersen LLP, we have had substantial experience with lender litigation.  If you have questions regarding , we would be happy to help.  We can be reached at (650) 327-2900 or on the web at

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