Gallardo

FACTS AND PROCEDURAL HISTORY

In reviewing the propriety of a trial court’s order sustaining a demurrer, we accept as true all factual allegations properly pleaded in the complaint. (Gu v. BMW of North America, LLC (2005) 132 Cal.App.4th 195, 200.) Accordingly, our summary of the facts is drawn from the material allegations of the operative pleading (Gallardo’s original complaint), the documents attached thereto (which the complaint incorporated by reference), and facts the court properly judicially noticed. (Ibid.) Since a demurrer admits the truth of all facts properly pleaded, we will refer to the allegations of the complaint without sometimes using the prefatory phrase “Gallardo alleges,” to avoid undue repetition of that phrase.

The Property and the Loan

Gallardo is the owner of a single-family dwelling on Farm Hill Way in Los Gatos (the Property), which is his principal residence. In 2006, Gallardo obtained a $750,000 option adjustable rate mortgage (Option ARM) loan from MortgageIt, Inc. (MortgageIt). The “defining feature” of an Option ARM is that for a limited number of years at the beginning of the loan, the borrower may avoid defaulting on the loan by making a minimum…