California Appeals Court: Real Estate Foreclosure While Borrower's Loan Modification Application Is Under Review Violates State Unfair Competition Law

From the law firm Dorsey & Whitney LLP:

• A recent decision by the California Court of Appeal held that the practice called “dual tracking” – when a lender forecloses on a property while the borrower’s application for a loan modification is under review – violates California’s Unfair Competition Law.
  
  The case, Majd v. Bank of America, N.A., 2015 WL 9304536 (Cal. Ct. App. Dec. 21, 2015), involves a borrower who obtained an interest-only, adjustable-rate mortgage to purchase a home in 2006. The borrower alleged that he eventually defaulted because he could not afford the monthly payments that had increased to over $5,000 due to interest rate adjustments. In 2012, the borrower submitted an application for a home loan modification. While the modification was still under review, the bank sold the property through a nonjudicial trustee sale. Shortly after the sale, the bank notified the borrower that it rejected his modification.
  
  The borrower filed a complaint claiming, among other things, that the foreclosure was invalid because the lender violated California’s Unfair Competition Law (UCL) when they foreclosed on his home before completing the review of his loan modification. The trial court dismissed the complaint for failure to state a claim. On appeal, the Court of Appeals reversed the dismissal, holding that the bank’s alleged conduct amounted to “unfair competition” in violation of the UCL. [more]

For more, see Can Lenders Foreclose While a Borrower’s Loan Modification Application is Under Review?