Buchalter Litigation Team Represents Industry Leaders in Lawsuit to Protect Junior Liens and Housing Affordability

Buchalter attorneys Jason Goldstein, Harry Chamberlain, Robert McWhorter, and Jarrett Osborne-Revis, together with CMA General Counsel Robert Finlay of Wright, Finlay & Zak, are representing the California Mortgage Association, California Credit Union League, United Trustees Association, and several businesses and individuals in a lawsuit challenging portions of Assembly Bill 130 (AB 130). Filed on September 8, 2025, the suit argues that AB 130 unconstitutionally impairs existing contracts, strips away established property rights, and violates due process and equal protection.

The challenged provisions of AB 130 supposedly focused on remedying issues related to a narrow class of abandoned mortgages known as “Zombie Mortgages.”  However, as enacted Civil Code section 2924.13 casts a much wider net that drastically reduces – and in many cases eliminates – the enforceability of virtually all loans secured by subordinate liens (e.g., second mortgages and equity lines of credit) on residential property, writes CMA general counsel Robert Finlay.

AB 130, passed earlier this year, redefines routine loan servicing practices as “unlawful” and imposes new restrictions on foreclosure rights, creating serious risks for junior lienholders and borrowers in need of foreclosure prevention alternatives. At a time when only 15 percent of Californians can afford a median-priced home, the law will limit borrower’s access to credit products that many homeowners and small businesses rely on. The plaintiffs will seek a preliminary and permanent injunction to stop enforcement and protect access to credit and financial flexibility across the state.