Press "Enter" to skip to content

Posts tagged as “loan modification”

Calif. App. Court (3rd Dist) Allows HOBR Claim for Vague Reasons for Loan Mod Denial

The Court of Appeal for the Third District of California recently affirmed in part, and reversed in part, an order granting a mortgage servicer’s motion to dismiss several causes of action brought by plaintiff borrowers for denying their requests to modify their mortgage loan. The appellate court affirmed the dismissal as to the borrowers’ counts for breach of contract, negligence, and intentional infliction of emotional distress.  However, it also held that the borrowers stated a valid cause of action under California’s Homeowner Bill of Rights, section 2923.6, and reversed as to that claim. Specifically, the appellate court concluded that the servicer’s…

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…

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…

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…

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…