Legal Question in Real Estate Law in California

I doubt that you truly have a mortgage. California law allows for mortgages, but they are rarely used. The preferred security instrument used in California is a deed of trust, which is subject to different rules.

A mortgage should be recorded, otherwise the mortgage holder could lose priority when other lienholders record their prospective instruments. That is a general rule, and there are some exceptions.

Unlike a deed of trust, an assignment of a mortgage that contains a power of sale, must be recorded, prior to exercise of the power of sale. "Where a power to sell real property is given to a mortgagee, or other encumbrancer, in an instrument intended to secure the payment of money, the power is part of the security and vests in any person who by assignment becomes entitled to payment of the money secured by the instrument. The power of sale may be exercised by the assignee if the assignment is duly acknowledged and recorded." (Civ. Code, sect. 2932.5.)

Case law in California has been consistent that Civil Code section 2932.5 does NOT apply to deeds of trust. "We find defendant HSBC Bank did not violate section 2932.5 because that statute does not apply when the power of sale is conferred in a deed of trust rather than a mortgage." (Calvo v. HSBC Bank (2nd Dist. 2011) [B226494]) That case is currently pending determination by the California Supreme Court on a petition for review, but I would not be surprised if either review is denied, or the Supreme Court affirms.

Mortages without a power of sale can only be foreclosed by judicial foreclosure. That requires a lawsuit, and the issue of whether an assignee was actually assigned a mortgage is raised in litigation.