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Washington Supreme Court hears arguments on whether HELOCs can be foreclosed under Deeds of Trust Act
Summary
The Washington State Supreme Court heard oral argument in Gabriel Marquez Vargas v. RRACP Opportunity Trust over whether a home equity line of credit (HELOC) can be treated as a negotiable instrument and thus be subject to a nonjudicial trustee sale under the Deeds of Trust Act. Counsel disputed statutory text, UCC incorporation, and consequences for borrowers.
The Washington State Supreme Court heard arguments in Gabriel Marquez Vargas v. RRACP Opportunity Trust on whether a home equity line of credit can be foreclosed nonjudicially under the Deeds of Trust Act (DTA).
Plaintiff counsel Vicente Omar Baraza, representing Gabriel Marquez Vargas, told the court the HELOC in question "is not a contract that can be foreclosed under the Deeds of Trust Act" because it cannot "constitute a negotiable instrument," and therefore lacks a holder entitled to use the DTA's extra‑judicial remedies. Baraza said the DTA must be "strictly construed in favor of homeowners" because the statute is in derogation of the common law and that judicial foreclosure would better protect the borrower given the HELOC’s drawn‑line structure and missing records.
Respondent counsel Tyler Melairn, representing RRACP Opportunity Trust and Real Time Resolutions, argued the DTA permits a beneficiary to establish…
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