Filed 12/18/15 Trapp v. U.S. Bank Nat. Assn. CA4/2

                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS
 California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
                                     or ordered published for purposes of rule 8.1115.


           IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                   FOURTH APPELLATE DISTRICT

                                                 DIVISION TWO



BENNIE G. TRAPP, SR., et al.,

         Plaintiffs and Appellants,                                      E059909

v.                                                                       (Super.Ct.No. RIC1107293)

U.S. BANK NATIONAL ASSOCIATON                                            OPINION
as Trustee, etc. et al.,

         Defendants and Respondents.



         APPEAL from the Superior Court of Riverside County. Gordon R. Burkhart,

Judge. Affirmed.

         Andrews Law Group, Brian C. Andrews and James E. Pilley, for Plaintiffs and

Appellants.

         Bryan Cave, Sean D. Muntz, Thomas Nanney and Katherine S. Walker, for

Defendants and Respondents U.S. Bank National Association as Trustee and JP Morgan

Chase Bank, N.A.




                                                             1
       After plaintiff and appellant Bennie G. Trapp, Sr. (Senior) defaulted on a home

mortgage, foreclosure proceedings were instituted and the property was sold at a trustee’s

sale. Senior and his son, B. Garrett Trapp, Jr. (Junior; collectively, “plaintiffs”), initiated

this suit against defendants and respondents U.S. Bank National Association as Trustee

and JP Morgan Chase Bank, N.A. (collectively, “defendants”).1 Plaintiffs’ operative

second amended complaint (SAC) asserts 15 causes of action to rescind the foreclosure

sale and award damages. The trial court sustained defendants’ demurrer to the SAC

without leave to amend and entered a judgment of dismissal. Plaintiffs appeal. Because

they have neither stated a cause of action, nor shown they can amend to state a cause of

action, we shall affirm.

                      FACTUAL AND PROCEDURAL HISTORY

       We presume the facts alleged in the SAC and in the appellants’ opening brief state

the strongest case for plaintiffs. (See Live Oak Publishing Co. v. Cohagan (1991) 234

Cal.App.3d 1277, 1286.) Stripped of legal conclusions (see Blank v. Kirwan (1985) 39

Cal.3d 311, 318), those facts are as follows: On December 23, 2004, Senior (age 77)

executed a promissory note in the amount of $126,000, secured by a deed of trust (DOT),

to refinance a home located at 12860 Perris Boulevard, No. D7, Moreno Valley,

California 92553 (Property). Senior purchased the Property for Junior, his quadriplegic


       1 U.S. Bank National Association as Trustee successor in interest to Bank of
America, National Association as Trustee, successor by merger to LaSalle Bank National
Association, as Trustee for Structured Asset Investment Loan Trust Mortgage Pass-
Through Certificates, Series 2005-2 (LaSalle) and JP Morgan Chase Bank, N.A. as
successor by merger to Chase Home Finance LLC (Chase).


                                               2
son. The DOT listed BNC Mortgage, Inc. (BNC) as the lender, Mortgage Electronic

Registration Systems, Inc. (MERS) as the beneficiary and T.D. Service Company as

trustee. Later, the loan was pooled with other loans in a securitized investment trust. In

2007, foreclosure proceedings were instituted, with a notice of default and election to sell

recorded on September 13, 2007. In or about January 2008, plaintiffs sought a loan

modification, which defendants purportedly considered. On May 28, 2008, an

assignment of the DOT to LaSalle was recorded. The Property was sold at a trustee’s

sale and the trustee’s deed upon sale was recorded on July 29, 2008, granting all interest

in the Property to LaSalle.

       On September 26, 2008, plaintiffs sued LaSalle and Chase regarding the

foreclosure of the Property (prior action). By way of their prior action, plaintiffs alleged

claims for quiet title, wrongful foreclosure, breach of duty of good faith and fair dealing,

fraudulent business practices, predatory lending practices, breach of duties associated

with the Americans with Disabilities Act, breach of duties associated with Sales Effected

to Elder Persons and Persons with Disabilities, and breach of contract. On June 19, 2009,

LaSalle and Chase removed the prior action to the United States District Court.

Following such removal, the federal court granted, in part, LaSalle’s and Chase’s motion

to dismiss. All but plaintiffs’ claims for predatory lending practices and breach of

contract (as applied to Chase only) were dismissed with prejudice. In June 2011,

plaintiffs dismissed the remaining claims without prejudice.

       On April 27, 2011, plaintiffs initiated this action. The SAC was filed on June 10,

2013. It asserts causes of action for (1) quiet title; (2) wrongful foreclosure; (3) breach of


                                              3
oral contract; (4) breach of good faith and fair dealing; (5) unfair business practices;

(6) promissory estoppel; (7) abuse of process; (8) fraud; (9) malicious prosecution;

(10) infliction of emotional distress; (11) notary fraud; (12) negligence; (13) negligent

misrepresentation; (14) slander of title; and (15) declaratory relief. Defendants filed their

demurrer to the SAC on July 26, 2013. On September 10, 2013, the trial court sustained

the demurrer without leave to amend. Judgment in favor of defendants was entered on

September 23, 2013.

                                       DISCUSSION

       A.     STANDARD OF REVIEW

       A demurrer should be sustained when “[t]he pleading does not state facts

sufficient to constitute a cause of action.” (Code Civ. Proc., § 430.10, subd. (e).)

       “We independently review the superior court’s ruling on a demurrer and determine

de novo whether the complaint alleges facts sufficient to state a cause of action or

discloses a complete defense. [Citations.] We assume the truth of the properly pleaded

factual allegations, facts that reasonably can be inferred from those expressly pleaded and

matters of which judicial notice has been taken. [Citations.] We liberally construe the

pleading with a view to substantial justice between the parties.” (Regents of University of

California v. Superior Court (2013) 220 Cal.App.4th 549, 558.)

       “‘If we determine the facts as pleaded do not state a cause of action, we then

consider whether the court abused its discretion in denying leave to amend the complaint.

[Citation.] It is an abuse of discretion for the trial court to sustain a demurrer without

leave to amend if the plaintiff demonstrates a reasonable possibility that the defect can be


                                              4
cured by amendment.’” (Bank of America, N.A. v. Mitchell (2012) 204 Cal.App.4th

1199, 1204.) However, “‘[s]uch a showing can be made for the first time to the

reviewing court . . . .’” (San Diego City Firefighters, Local 145 v. Board of

Administration etc. (2012) 206 Cal.App.4th 594, 606.) “Whether a plaintiff will be able

to prove its allegations is not relevant.” (Chavez v. Indymac Mortgage Services (2013)

219 Cal.App.4th 1052, 1057.)

       B.     ANALYSIS

              1.      JUNIOR LACKS STANDING TO SUE DEFENDANTS

       “Every action must be prosecuted in the name of the real party in interest, except

as otherwise provided by statute.” (Code Civ. Proc., § 367.) “‘A real party in interest

ordinarily is defined as the person possessing the right sued upon by reason of the

substantive law. [Citation.]’ [Citation.] A real party in interest must have an actual,

substantial interest in the subject matter of the action.” (City of Industry v. City of

Fillmore (2011) 198 Cal.App.4th 191, 208.) “A party who is not the real party in interest

lacks standing to sue. [Citation.] . . . A complaint filed by someone other than the real

party in interest is subject to general demurrer on the ground that it fails to state a cause

of action.” (Redevelopment Agency of San Diego v. San Diego Gas & Electric Co.

(2003) 111 Cal.App.4th 912, 920-921.)

       Here, Senior is the person who borrowed the money and is the only trustor on the

deed of trust. Based on the allegations in plaintiffs’ pleadings, Senior is the only person

who owns or holds title to the Property. Thus, Senior is the real party in interest.

Because Junior is not a real party in interest, he lacks standing to sue. Nonetheless, our


                                               5
analysis continues to consider the claims raised by plaintiffs, even thought Junior has no

standing.

              2.      PLAINTIFFS CONCEDE NOTARY FRAUD, MALICIOUS

                      PROSECUTION, NEGLIGENCE AND ABUSE OF PROCESS

                      CLAIMS

       Plaintiffs concede that their claims for notary fraud (eleventh cause of action),

malicious prosecution (ninth cause of action), negligence (twelfth cause of action) and

abuse of process (seventh cause of action) fail.

              3.      PLAINTIFFS LACK STANDING TO BRING CLAIMS BASED ON

                      PURPORTED DEFECTS IN ASSIGNMENTS OF MORTGAGE

       Five of plaintiffs’ causes of action—quiet title (first cause of action), wrongful

foreclosure (second cause of action), breach of covenant of good faith and fair dealing

(fourth cause of action), slander of title (fourteenth cause of action), declaratory relief

(fifteenth cause of action)—are grounded in purported flaws in the chain of title to the

note and deed of trust, which they argue render the assignments void, so the parties who

foreclosed on the Property were without authority to do so. We find that plaintiffs lack

standing to raise this argument.2

       The great weight of California authority rejects the notion that a borrower in

default on a loan has standing to attack a purportedly void assignment of a note or deed

of trust to which it is not a party as a means of challenging the foreclosure process. In

       2 Because we address the viability of these claims on the merits, we need not
reach defendants’ assertion that they are barred by the doctrine of res judicata.


                                               6
arguing otherwise, Senior relies virtually entirely on Glaski v. Bank of America (2013)

218 Cal.App.4th 1079 (Glaski). In that case, the appellate court determined that the

borrower had standing to attack a void assignment to which it was not a party. (Id. at p.

1095.)

         We doubt, however, that Glaski was correctly decided. (See People v. Gipson

(2013) 213 Cal.App.4th 1523, 1529 [“It is true that we typically follow the decisions of

other appellate districts or divisions, but only if we lack good reason to disagree”].)

Among other defects in its reasoning, the Glaski court relies on federal case law

interpreting the law of other jurisdictions. (Glaski, supra, 218 Cal.App.4th at pp. 1094-

1095.) California cases other than Glaski have consistently held that a borrower lacks

standing to attack a purportedly invalid assignment of their mortgage absent a showing of

prejudice. (E.g., Siliga v. Mortgage Electronic Registration Systems, Inc. (2013) 219

Cal.App.4th 75, 85-86.) And prejudice rarely, if ever, can be shown in such cases,

because the borrower’s obligations under the promissory note remain unchanged,

regardless of who holds the present beneficial interest. (See Jenkins v. JP Morgan Chase

Bank, N.A. (2013) 216 Cal.App.4th 497, 515 (Jenkins) [finding that even assuming the

transfers of the promissory note were invalid, the borrower is not the “victim” because

her obligations remained unchanged].) We are not aware of any California case that has




                                              7
followed Glaski on the issue of a borrower’s right to challenge a foreclosure based on an

allegedly improper assignment.3

       Plaintiffs’ primary articulated argument as to why these causes of action state a

claim primarily rests on Glaski. We reject Glaski, and conclude that those causes of

action fail to state a claim. For similar reasons, plaintiffs cannot show prejudice from the

foreclosure. (Siliga v. Mortgage Electronic Registration Systems, Inc., supra, 219

Cal.App.4th at p. 85.) No prejudice occurs when a borrower is in default and fails to

tender and cure the default. (Herrera v. Federal National Mortgage Assn. (2012) 205

Cal.App.4th 1495, 1508 [Fourth Dist., Div. Two]; Fontenot v. Wells Fargo Bank, N.A.

(2011) 198 Cal.App.4th 256, 272.) We reject plaintiffs’ effort to rely on contrary federal

decisions that predate these dispositive California authorities.4




       3 The California Supreme Court has granted review of several cases in which the
Court of Appeal had rejected Glaski—the lead case is Yvanova v. New Century Mortgage
Corp. (2014) 226 Cal.App.4th 495, review granted August 27, 2014, S218973.

       4 Plaintiffs’ lack of standing to challenge purported flaws in the chain of
assignments is hardly the only fatal flaw in these claims. In light of our conclusion
regarding Glaski, however, we need not discuss those additional issues. Nonetheless,
during oral argument, plaintiffs asserted that their claim for wrongful foreclosure should
remain viable because no notice of sale was posted. (Scott v. Security Trust Ins. & Guar.
Co. (1937) 9 Cal.2d 606, 610.) In opposition to defendants’ demurrer, plaintiffs attached
a copy of the Trustee’s Deed Upon Sale which stated that “[a]ll requirements of law
regarding the mailing of copies of notices or publications of a copy of the Notice of
Default or the personal delivery of the copy of the Notice of Default and the posting and
publication of copies of the Notice of Sale have been complied with.”


                                              8
              4.     PLAINTIFFS LACK STANDING TO BRING AN UNFAIR

                     COMPETITION CLAIM UNDER PROPOSITION 64

       Plaintiffs’ claim for unfair business practices (fifth cause of action) purports to

assert a claim under Business and Professions Code sections 17200 et seq., commonly

referred to as the unfair competition law (UCL). (See Jenkins, supra, 216 Cal.App.4th at

p. 520.) Even if we were to assume, however, that plaintiffs have alleged facts indicating

defendants’ alleged actions violated at least one of the UCL’s unfair competition prongs

(they have not), plaintiffs could not show a causal link between the purported violations

and any economic injury they may have suffered. As such, plaintiffs lack standing to

assert a claim under the UCL.

       “Under the UCL, any person or entity that has engaged, is engaging or threatens to

engage ‘in unfair competition may be enjoined in any court of competent jurisdiction.’

[Citations.] ‘Unfair competition’ includes ‘any unlawful, unfair or fraudulent business

act or practice and unfair, deceptive, untrue or misleading advertising.’” (Jenkins, supra,

216 Cal.App.4th at p. 520.) However, under the UCL as amended by Proposition 64,

private standing to bring a UCL action is restricted to “a person who has suffered injury

in fact and has lost money or property as a result of the unfair competition.” (Bus. &

Prof. Code, § 17204, italics added, as amended by Prop. 64, § 3, as approved by voters,

Gen. Elec. (Nov. 2, 2004).)

       The foreclosure of the Property suffices to establish an injury in fact in the

meaning of the UCL—the alleged loss of a property interest is sufficient to establish an

economic injury for pleading purposes under the UCL. (Jenkins, supra, 216 Cal.App.4th


                                              9
at p. 522.) Nevertheless, plaintiffs have not established and cannot establish a causal link

between that injury in fact and any purported unlawful, unfair, and/or fraudulent business

practice by defendants. Plaintiffs’ default triggered the power of sale clause in the deed

of trust, subjecting the Property to nonjudicial foreclosure, not any of the alleged unfair

competition practices. (See id. at p. 523 [so reasoning regarding impending foreclosure].)

       In short, plaintiffs fail to establish standing to assert a UCL claim, and in any case

have not pleaded any unlawful, unfair or fraudulent act on the part of defendants. As

such, their UCL claim was properly dismissed on demurrer.

              5.     PLAINTIFFS FAIL TO STATE A CAUSE OF ACTION FOR

                     PROMISSORY ESTOPPEL, FRAUD OR NEGLIGENT

                     MISREPRESENTATION

       Plaintiffs assert that defendants “made a promise, through oral representations,

that they would not foreclos[e] on the Subject Property.” They argue that defendants’

actions constitute claims for promissory estoppel (sixth cause of action), fraud (eighth

cause of action), and negligent misrepresentation (thirteenth cause of action). Defendants

argue that plaintiffs’ allegations lack factuality and specificity. We agree with

defendants.

       According to plaintiffs, defendants misrepresented their willingness to enter into a

loan modification agreement. “The elements of fraud, which give rise to the tort action

for deceit, are (1) a misrepresentation, (2) with knowledge of its falsity, (3) with the

intent to induce another’s reliance on the misrepresentation, (4) justifiable reliance, and

(5) resulting damage. [Citation.] The tort of negligent misrepresentation, a species of the


                                             10
tort of deceit [citation], does not require intent to defraud but only the assertion, as a fact,

of that which is not true, by one who has no reasonable ground for believing it to be

true.” (Conroy v. Regents of University of California (2009) 45 Cal.4th 1244, 1255.)

Promissory estoppel requires “‘“‘(1) a promise clear and unambiguous in its terms;

(2) reliance by the party to whom the promise is made; (3) [the] reliance must be both

reasonable and foreseeable; and (4) the party asserting the estoppel must be injured by his

reliance.’”’” (Aceves v. U.S. Bank, N.A. (2011) 192 Cal.App.4th 218, 225.)

       “In California, fraud must be pled specifically; general and conclusory allegations

do not suffice.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) The normal

policy of liberally construing pleadings against a demurrer will not be invoked to sustain

a fraud cause of action that fails to set forth such specific allegations. (Ibid.) The

heightened pleading standard for fraud requires “‘pleading facts which “show how, when,

where, to whom, and by what means the representations were tendered.”’” (Ibid.) Thus,

“every element of the cause of action for fraud must be alleged in full, factually and

specifically . . . .” (Wilhelm v. Pray, Price, Williams & Russell (1986) 186 Cal.App.3d

1324, 1331.) The specificity requirement serves two purposes: (1) to furnish the

defendant with certain definite charges that can be intelligently met; and (2) to ensure the

complaint is specific enough so that the court can “weed out nonmeritorious actions on

the basis of the pleadings.” (Committee on Children’s Television, Inc. v. General Foods

Corp. (1983) 35 Cal.3d 197, 216-217, superseded by statute on another issue as stated in

Sanchez v. Bear Stearns Residential Mortgage Corp., 2010 U.S. Dist. LEXIS 46043, at

*18, fn. 4 (S.D. Cal. May 11, 2010).)


                                               11
       Here, plaintiffs failed to identify by name, title, or location, the person(s), along

with the defendant who employed such person(s), who allegedly made promises

concerning a loan modification. Plaintiffs also did not identify the terms of the alleged

modification (such as reduction in principal, monthly payment, interest rate, or

forgiveness of debt), when the modification would take effect, and whether it would be a

temporary or permanent modification. The SAC’s lack of factual specificity supports the

trial court’s conclusion plaintiffs failed to state facts sufficient to constitute a cause of

action for fraud.5




       5  During oral argument, plaintiffs referenced Aceves v. U.S. Bank N.A., supra, 192
Cal.App.4th 218, and asserted that their claim for promissory estoppel should remain
viable because the SAC alleged that they relied on defendants’ promise not to foreclosure
by completing the refinance application when they could have pursued alternative
measures, such as filing a Chapter 13 bankruptcy, refinancing the Property, or selling it.
In Aceves, the defendant promised to work with the plaintiff to modify and reinstate the
loan if she refrained from converting her Chapter 7 bankruptcy to a Chapter 13 plan or
opposing defendant’s motion to lift the bankruptcy stay. (Id. at p. 227.) However, once
the bankruptcy stay was lifted, the defendant foreclosed. (Ibid.) The court found
promissory estoppel. (Ibid.) Similarly in Garcia v. World Savings, FSB (2010) 183
Cal.App.4th 1031, when the plaintiff held off obtaining a loan to repay her mortgage
arrearages, the court held that the defendant’s promise to postpone the foreclosure sale of
the property supported a promissory estoppel cause of action. (Id. at p. 1046.) Here,
plaintiffs had not filed for protection under the bankruptcy law, nor had they contacted
another lender to refinance the Property.


                                               12
              6.     PLAINTIFFS FAIL TO STATE A CAUSE OF ACTION FOR

                     BREACH OF ORAL CONTRACT, BREACH OF GOOD FAITH

                     AND FAIR DEALING OR INFLICTION OF EMOTIONAL

                     DISTRESS

       Three of plaintiffs’ causes of action— breach of oral contract (third cause of

action), a breach of the covenant of good faith and fair dealing (fourth cause of action),

and infliction of emotional distress (tenth cause of action)—are based on their claim that

they were assured that defendants “would not proceed or continue with the foreclosure

process with regard to the Subject Property while they were reviewing Plaintiffs’ request

for a loan modification.”

       “[T]he elements of a cause of action for breach of contract are (1) the existence of

the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s

breach, and (4) the resulting damages to the plaintiff.” (Oasis West Realty, LLC v.

Goldman (2011) 51 Cal.4th 811, 821.) “Every contract contains an implied covenant of

good faith and fair dealing providing that no party to the contract will do anything that

would deprive another party of the benefits of the contract. [Citations.] The implied

covenant protects the reasonable expectations of the contracting parties based on their

mutual promises. [Citations.] The scope of conduct prohibited by the implied covenant

depends on the purposes and express terms of the contract. [Citation.] Although breach

of the implied covenant often is pleaded as a separate count, a breach of the implied

covenant is necessarily a breach of contract.” (Digerati Holdings, LLC v. Young Money

Entertainment, LLC (2011) 194 Cal.App.4th 873, 885, fn. omitted.)


                                             13
       Mortgages come within the statute of frauds. (Secrest v. Security Nat. Mortg.

Loan Trust 2002-2 (2008) 167 Cal.App.4th 544, 552 (Secrest).) A contract coming

within the statute of frauds is invalid unless it is memorialized by a writing subscribed by

the party to be charged or by the party’s agent. (Civ. Code, § 1624.) “A mortgage can be

created, renewed, or extended, only by writing, executed with the formalities required in

the case of a grant of real property.” (Civ. Code, § 2922.)

       Here, plaintiffs allege they entered into an oral contract with defendants, and that

the contract required defendants to forebear from foreclosing on the Property while they

were reviewing plaintiffs’ request for a loan modification. While plaintiffs’ alleged oral

contract did not create, renew, or extend the promissory note or DOT, it allegedly

modified them by changing defendants’ immediate right to foreclose on the Property.

“An agreement to modify a contract that is subject to the statute of frauds is also subject

to the statute of frauds. [Citations.] A modification of a contract is a change in the

obligations of a party by a subsequent mutual agreement of the parties.” (Secrest, supra,

167 Cal.App.4th at p. 553.) Plaintiffs’ claims, for breach of contract and breach of the

implied covenant of good faith and fair dealing, fail because any agreement to forebear

from foreclosing on the Property was not in writing.

       Regarding plaintiffs’ claim that defendants’ actions resulted in plaintiffs’

emotional distress, we agree with defendants that creditors in pursuit of debtors may use

permissible legal remedies to pursue their economic interests in collecting a debt or

foreclosing on their security for their loan regardless of the distress caused by their legal

actions. (Kruse v. Bank of America (1988) 202 Cal.App.3d 38, 67 [“A party is not


                                              14
subject to liability for infliction of emotional distress when it has merely pursued its own

economic interests and properly asserted its legal rights”].) Moreover, plaintiffs only

alleged that they suffered from “humiliation, mental anguish and emotional and physical

distress” as result of defendants’ actions. They list their injuries as depression, anxiety,

insomnia, intense headaches, shortness of breath, frequent nightmares, upset stomach,

bowel control problems, intense tightening of the neck muscles, and severe chest pains,

but offer no detail to support these general and conclusory allegations. The SAC’s lack

of factual specificity supports the trial court’s conclusion plaintiffs failed to state facts

sufficient to constitute a cause of action for infliction of emotional distress.

              7.      LEAVE TO AMEND WAS PROPERLY DENIED

       None of plaintiffs’ arguments demonstrate that they can cure the SAC by

amendment. (Torres v. City of Yorba Linda (1993) 13 Cal.App.4th 1035, 1041.) In light

of the above, therefore, plaintiffs have demonstrated no error with respect to the trial

court’s decision to sustain defendants’ demurrer without leave to amend. However, at

oral argument, plaintiffs asserted that they should be allowed to add a claim for predatory

lending. “‘Predatory lending’ is a term generally used to characterize a range of abusive

and aggressive lending practices, including deception or fraud, charging excessive fees

and interest rates, making loans without regard to a borrower’s ability to repay, or

refinancing loans repeatedly over a short period of time to incur additional fees without

any economic gain to the borrower. Predatory lending is most likely to occur in the

rapidly growing ‘subprime’ mortgage market, which is a market generally providing

access to borrowers with impaired credit, limited income, or high debt relative to their


                                               15
income. Mortgages in this market tend to be in smaller amounts, and with faster

prepayments and significantly higher interest rates and fees, than ‘prime’ mortgages. [¶]

In 2001, California enacted legislation to combat predatory lending practices that

typically occur in the subprime home mortgage market. (Fin. Code, §§ 4970-4979.8

(Division 1.6).)” (American Financial Services Assn. v. City of Oakland (2005) 34

Cal.4th 1239, 1244, fn. omitted.)

       Division 1.6 applies to a covered loan which is a “consumer loan in which the

original principal balance of the loan does not exceed the most current conforming loan

limit for a single-family first mortgage loan established by the Federal National Mortgage

Association in the case of a mortgage or deed of trust, and where one of the following

conditions are met: [¶] (1) For a mortgage or deed of trust, the annual percentage rate at

consummation of the transaction will exceed by more than eight percentage points the

yield on Treasury securities having comparable periods of maturity on the 15th day of the

month immediately preceding the month in which the application for the extension of

credit is received by the creditor. [¶] (2) The total points and fees payable by the

consumer at or before closing for a mortgage or deed of trust will exceed 6 percent of the

total loan amount.” (Fin. Code, § 4970, subd. (b).) With respect to a covered loan,

Division 1.6 contains numerous prohibitions and limitations, including prohibiting a

person who originates a covered loan from steering, counseling, or directing “any

prospective consumer to accept a loan product with a risk grade less favorable than the

risk grade that the consumer would qualify for based on that person’s then current

underwriting guidelines, prudently applied, considering the information available to that


                                             16
person, including the information provided by the consumer.” (Fin. Code, § 4973, subd.

(l)(1).)

           Plaintiffs argue that Senior, a 70-year-old man with a credit score above 725, was

steered towards a subprime loan when he should been offered a prime loan at a much

lower interest rate and payment terms. Otherwise, on appeal plaintiffs do not address the

legal requirements for a claim of predatory lending, nor have they shown how they can

plead facts sufficient to state such a cause of action. In short, plaintiffs fail to meet their

burden on appeal.

                                          DISPOSITION

           The judgment is affirmed. Defendants are awarded their costs on appeal.

           NOT TO BE PUBLISHED IN OFFICIAL REPORTS



                                                           MILLER
                                                                                                  J.


We concur:


McKINSTER
                           Acting P. J.


CODRINGTON
                                     J.




                                                17
