Firm Commentary:

I’m pleased to relate another WIN for Home Owners in Financial Distress.  This is the first case where a California court granted a Temporary Restraining Order (TRO) to prevent foreclosure where the loan servicer committed a “dual tracking violation” following a SECOND loan modification following a “material change in financial circumstances”.

Under the new California Home Owner Bill of Rights or HOBR, a material change in financial circumstances allows a borrower to receive dual tracking protections even if the borrower had previously been reviewed for a loan modification.  The court also issued the injunction without requiring the Borrower to post a bond, stating that the bank was adequately protected by the deed of trust.

Here is the Court’s Ruling:

The Court finds on a preliminary assessment, assuming Plaintiffs’
allegations to be true, that the Plaintiffs have a reasonable chance of success on the merits on their claims, particularly as they relate to Defendants’ conduct
during the loan modification proceedings. See Cal. Civ. Code §
2923.6.

 Indeed Plaintiff has provided documentation that there has
been a material change in her financial circumstances since the date of
the borrower’s previous application, and such change has been
documented and submitted to the mortgage services. See Exs. A at 12, H.

Despite such notification, however, Defendants intend to proceed with the
trustee sale, and Plaintiffs allege that Defendants have not pursued
further loan modification efforts, in violation of California law. In
light of the chance of success of the merits as to the Civ. Code
§ 2923.6 claim, the Court finds postponement of the foreclosure sale
appropriate here.

This Court has broad discretion as to the amount of the security bond,
including the discretion to waive or limit the amount where no hardship against
defendant is apparent, or where plaintiff’s case involves the enforcement of a public interest. See Jorgensen v. Cassidy, 320 F.3d 906, 919 (9th Cir. 2003).
Here, both situations exist. There is no realistic harm to Defendants from
a temporary restraint of the foreclosure proceedings, since their interests
are secured by the Deed of Trust. If the Defendants ultimately prevail
in this litigation, Defendants may proceed with the sale of the
Property. The Court finds no bond is required at this time.

 

As the economy turns for the better, Home Owners previously denied a loan modification for lack of income can get a second bite at the apple if they present their facts to the loan servicer in the proper way and use the new law to prevent a wrongful foreclosure.  Call the Firm to have your case analyzed. 

–J. Arthur Roberts, Esq.

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