In the current flood of mortgage litigation, the so-called "tender rule" — that a borrower generally cannot set aside a foreclosure unless he or she tenders the full amount owed on the loan — poses a significant obstacle for many plaintiffs. The rationale behind this rule is that a borrower should not be able to avoid foreclosure when the borrower cannot pay his or her debt and any procedural errors could be cured. In Ferguson v. Avelo Mortgage, LLC (Cal.App. 2 Dist. Jun. 1, 2011) --- Cal.Rptr.3d ---, 2011 WL 2139143, the Court of Appeal again affirmed the tender rule and, by doing so, took an additional step favorable to lenders.
In Ferguson, the plaintiffs attempted to avoid the tender rule by arguing it did not apply. In particular, they challenged the authority of Avelo Mortgage, LLC to foreclose. Mortgage Electronic Registration Systems (MERS), the original beneficiary under the deed of trust, assigned its interest in the property to Avelo. The plaintiffs sued to quiet title and set aside the foreclosure. The trial court sustained Avelo's demurrer on the ground the plaintiffs failed to tender.
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