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Posts published in “Loan Modification”

Calif. App. Court (2nd Dist) Holds No Duty of Care Owed in Loan Mod Negotiations

Disagreeing with contrary rulings from the First and Sixth Districts, the California Court of Appeal for the Second District recently affirmed a trial court’s ruling that no duty of care is owed to a borrower during contract negotiations for a mortgage loan modification. A copy of the opinion in Sheen v. Wells Fargo Bank, N.A. is available at:  Link to Opinion. In 1998, the plaintiff borrower obtained a $500,000 loan secured by a deed of trust (the “first loan”).  The first loan is not at issue.  In 2005, the borrower obtained two junior loans from the defendant bank in the amounts $167,820 (the…

Calif. App. Court (1st Dist) Rejects Servicer’s Attempt to Condition Reinstatement on Payment of Deferred Amounts

The Court of Appeal of the State of California, First Appellate District, recently held that California Civil Code § 2924c permits a borrower to reinstate a modified home mortgage loan by paying only the past due modified payments and associated fees and charges, and that a servicer cannot lawfully condition reinstatement of a loan on the payment of amounts that were deferred in the loan modification. In so ruling, the Appellate Court rejected the servicer’s argument that the loan modification agreement allowed it to nullify the modification upon the borrower’s default and to require payment of the earlier default according…

11th Cir. Holds Moving to Reset Foreclosure Sale During Loss Mit Did Not Violate RESPA or FDCPA

The U.S. Court of Appeals for the Eleventh Circuit affirmed the dismissal of a borrower’s claim, holding that a mortgage servicer’s motion to reschedule a previously set foreclosure sale after it approved the borrower for a trial loan modification plan did not violate the federal Real Estate Settlement Procedures Act because the motion to reschedule did not move for an order of sale. A copy of the decision in Landau v. RoundPoint Mortgage Servicing Corp. is available at:  Link to Opinion. A borrower defaulted on her mortgage loan and her lender filed a foreclosure action.  The lender obtained final summary judgment in…

DC Cir. Upholds Dismissal of False Claims Act Action Arising Out of 2012 Nat’l Mortgage Settlement

The U.S. Court of Appeals for the D.C. Circuit recently affirmed the dismissal of a federal False Claims Act lawsuit alleging a lender’s violation of the 2012 National Mortgage Settlement and violation of the Home Affordable Modification Program through the lender’s alleged false certifications of compliance. A link to the opinion in U.S. ex rel. Schneider et al. v. JPMorgan Chase Bank is available at:  Link to Opinion. The relator, an owner of a mortgage servicing company who purchased numerous loans from the lender, alleges to have discovered numerous violations of the 2012 National Mortgage Settlement based upon the lender’s handling of…

Calif. App. Court (3rd Dist) Holds Servicer May Owe Borrower Duty of Care as to Loan Mod Efforts

Adding to the growing split of authority among California’s various state appellate courts, and among various federal courts in California, the Court of Appeal of the State of California, Third Appellate District, recently held that a loan servicer may owe a duty of care to a borrower through application of the “Biakanja” factors, even though its involvement in the loan does not exceed its conventional role. In so ruling, the Third District “assumed without deciding” that California Civil Code § 2923.6(g) offers an affirmative defense to a negligence claim in loan modification cases where the borrower submits multiple loan modification…

9th Cir. Holds Temporary Stay of Foreclosure Not Enough to Satisfy Diversity ‘Amount in Controversy’

The U.S. Court of Appeals for the Ninth Circuit recently held that the trial court did not have subject matter jurisdiction based upon diversity over claims which sought a temporary stay of a foreclosure sale pending the review of a loan modification application because the amount of controversy did not exceed $75,000. In so ruling, the Court held that, for claims which merely seek a temporary stay of a foreclosure sale, the amount in controversy is not the value of the underlying loan. A copy of the opinion in Corral v. Select Portfolio Servicing, Inc. is available at:  Link to Opinion.…

NJ Supreme Court Enforces Modification Settlement Made Through Residential Mortgage Foreclosure Mediation Program

The Supreme Court of New Jersey reversed the decision of the Appellate Court, and held that a settlement that a borrower and a lender reached during mediation pursuant to the Residential Mortgage Foreclosure Mediation Program was enforceable because the borrower fulfilled all contingent terms making the agreement permanent. A copy of the opinion is available at:  Link to Opinion. The borrower obtained a home mortgage loan from the lender (“bank”).  In 2006, the borrower defaulted on her loan. The bank filed a foreclosure complaint in chancery court. In August 2007, the bank obtained a final judgment in the foreclosure action. In 2010,…

1st Cir. Rejects Borrower’s Loan Modification Fraud Allegations as Untimely

The U.S. Court of Appeals for the First Circuit recently held that a borrower cannot invoke the discovery rule to assert an otherwise untimely Massachusetts UDAAP claim (Chapter 93A) relating to a loan modification agreement, because the alleged harm was not “inherently unknowable” at the time of its occurrence. In so ruling, the Court determined that the borrower knew he was required to make monthly payments when he signed the loan modification agreement.  Therefore, the statute of limitations began to run when the borrower stopped making payments, not when the creditor provided notice of the default. A copy of the opinion…

Illinois App. Court (3rd Dist) Holds Third Refiled Foreclosure Not Barred

The Appellate Court of Illinois, Third District, recently rejected a mortgagor’s argument that the Illinois single refiling rule barred a third attempt at foreclosure where the intervening foreclosure complaint was premised upon an alleged default under a loan modification agreement. A copy of the opinion in Wells Fargo Bank, N.A. v. Norris is available at:  Link to Opinion. The convoluted procedural and factual history for the mortgage loan at issue in this matter can be boiled down to the following: The defendant mortgagor (who was not a signatory to the promissory note) and his ex-spouse defaulted under the terms of…

8th Cir. Affirms Ruling in Favor of Servicers Due to Plaintiffs’ Misrepresentations in Loan Mod Application

The U.S. Court of Appeals for the Eighth Circuit recently affirmed summary judgment against a former husband borrower and his ex-wife on their claims under the Missouri Merchandising Practices Act (MMPA) and for tortious interference with contract. In so ruling, the Court held that the foreclosure of the plaintiffs’ home loan was justified due to the husband’s misrepresentation on the modification application that he, not his ex-wife who was responsible for making the payments, was experiencing financial hardship and could not afford the loan payments. A copy of the opinion in Dale Wheatley v. JP Morgan Chase Bank is available…

8th Cir. Holds Borrower’s Post-Foreclosure Modification Allegations Not Time-Barred

The U.S. Court of Appeals for the Eighth Circuit recently reversed the dismissal of a borrower’s lawsuit against his mortgagee for failing to restore his title after a non-judicial foreclosure and subsequent execution of a loan modification agreement, holding that the borrower’s claims were not time-barred and accrued only when he tried to sell the home more than five years after the modification agreement. A copy of the opinion in White v. CitiMortgage, Inc. is available at:  Link to Opinion. A borrower refinanced his home mortgage loan in 2003, and defaulted in 2008. The loan servicer gave the borrower notice and…

Calif. App. Court (3rd Dist) Holds Loan Mod Denial Letter Allowing Only 15 Days to Appeal Was ‘Material Violation’ of HBOR

The Court of Appeal of the State of California, Third Appellate District, recently held that a mortgage servicer violated California’s Homeowner Bill of Rights (HBOR), Civ. Code § 2923.6(d), when it sent a borrower a loan modification denial letter stating that the homeowner had only 15 days to appeal the denial. In so ruling, the Appellate Court held that the servicer’s denial letter was a material violation of section 2923.6, and therefore the homeowner alleged a valid cause of action for injunctive relief under section 2924.12. A copy of the opinion in Berman v. HSBC Bank USA, N.A is available…