In Lyons v. US Bank and NWTS, the Washington State Supreme Court found that a trustee can be liable for damages suffered by a debtor under the Consumer Protection Act even without a property having reached sale. The title of trustee is one that should be borne with the very derivation of the term in mind. Trustees are in a position of trust by virtue of holding legal title to an item that’s beneficial interest belongs to another. The persons for whose benefit the item is held must trust the trustee. A non-judicial foreclosure trustee holds property in trust for the bank only if a default is not cured. In this case, the trustee appeared to continue with sale, not recognizing a loan modification and receipt of funds, which cured the default. In addition, the trustee failed to recognize a change in beneficiary. The court found that the trustee may have been serving the bank that paid the bills, rather than operating as an impartial third party exercising independent judgment.
Foreclosure impacts home ownership of not only debtors, but also those with whom they reside. The impact of a foreclosure necessitates curiosity and diligence. The Washington State Supreme Court made clear here that a trustee who fails to exercise these traits may be exposing themselves to liability. If you aren’t sure whether your current trustee is able to exercise these traits, feel free to contact the creditor’s rights section in our office. We’d be happy to work through your foreclosure methodically, helping you avoid unnecessary complications by racing to the finish line without considering and avoiding the risks along the way.