Reported / Citable
Background
Rene Torres executed a $186,558 promissory note and deed of trust in 2021, secured by San Antonio property. The loan was assigned to PennyMac and modified in 2023. PennyMac alleged that Torres defaulted, received notice of default and acceleration, and did not cure.
PennyMac sued for breach of contract and judicial foreclosure. Torres and Castle Credit Co. Holdings, an alleged junior lienholder, were served but did not appear, and the clerk entered default. The United States, on behalf of HUD, answered; under a consent order, it did not oppose a foreclosure sale but could not be assessed attorney’s fees or other monetary damages.
The Court’s Holding
Magistrate Judge Richard B. Farrer recommended granting PennyMac’s motion for default judgment against Torres and Castle Credit Co. The pleaded allegations and loan documents established the mortgagee’s right to enforce its lien, Torres’s default, notice and opportunity to cure, and the elements of PennyMac’s breach-of-contract claim.
The recommendation would authorize judicial foreclosure and award PennyMac $160,584.56 through January 30, 2026, including $132,069.83 in principal and $28,514.73 in costs and expenses, including reasonable attorney’s fees, plus $23.97 in daily accruing interest thereafter and post-judgment interest. Castle Credit’s interest, if any, would be declared inferior to PennyMac’s lien, with no monetary award against Castle Credit. The recommendation preserves the consent-order limits on recovery from HUD.
Key Takeaways
- A borrower’s default after notice and an opportunity to cure supported breach-of-contract relief and judicial foreclosure.
- Default judgment may establish a junior lienholder’s inferior priority without imposing monetary liability on that lienholder.
- Attorney’s fees and other monetary damages could not be recovered from HUD under the consent order.
Why It Matters
The recommendation illustrates the proof required to obtain default foreclosure relief in federal court: valid loan documents, assignment, default, notice, and evidence supporting the requested debt. It also distinguishes between foreclosure and lien-priority relief against defaulting parties and the limited relief available against a federal lienholder that has appeared and entered a consent arrangement.