Thursday, July 16, 2015

California Appeals Court: Tender Of Outstanding Loan Balance Not Required To Halt Foreclosure When Claiming Violation Of "Dual Tracking" Prohibition In State's Homeowner's Bill Of Rights

From a recent post in the Money & Dirt blog (California):
  • Many claims based on flawed foreclosure sales never get out of the starting gates because the borrower fails to allege a pre-lawsuit “tender” of all amounts due on the loan.

    But as illustrated in a recent decision by the California Court of Appeal (Second District in Los Angeles) — Valbuena v. Ocwen Loan Servicing, LLC — a tender is not required to state a claim under the Homeowner’s Bill of Rights (HBOR) for violation of the prohibition on “dual tracking” (foreclosing on a loan while negotiating with the borrower to avoid foreclosure).


    The [appeals] Court observed that nothing in the [California Homeowner's Bill of Rights (Civ.Code,[4] §§ 2920.5, 2923.4-.7, 2924, 2924.9-.12, 2924.15, 2924.17-.20) ("HBOR"), effective January 1, 2013] requires that a borrower tender the loan balance before filing suit based on a violation of the statutory requirements. “Indeed, such a requirement would completely eviscerate the remedial provisions of the statute.” The Court further noted that the rationale for the tender rule — preventing the unnecessary setting aside of completed trustee’s sales based on improper notice where the borrower had no ability to pay the loan amount even on proper notice — served no purpose in cases seeking monetary damages (not the setting aside of the sale) based on statutory violations (not defective notice).

    The Court concluded: “In short, we agree with plaintiffs that a tender of the amount due under the loan is not required to state a cause of action under section 2923.6.” The Court also agreed with plaintiffs that the issues of whether plaintiffs had submitted complete documentation supporting their loan modification request, and whether Ocwen had provided a “reasonable timeframe” for plaintiffs’ submission of a complete application, were not suitable for determination on a demurrer..
For an analysis of the facts, and the applicable California law, see Tender Not Required for a “Dual Tracking” Claim.

For the court ruling, see Valbuena v. Ocwen Loan Servicing, LLC, (Cal. App. 2d Dist. Div. 5, May 21, 2015).

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