The Superior Court of California, County of Sacramento, has granted a preliminary injunction to halt Wells Fargo from foreclosing on a home, finding it likely that the homeowner would prevail on his claim that the bank engaged in improper “dual tracking” in violation of the California Homeowners Bill of Rights (“HBOR”) and would suffer great injury if the home was sold.
“Dual tracking” occurs when a lender simultaneously considers a borrower for a mortgage loan modification and proceeds with a foreclosure action. HBOR went into effect in January 2013 to provide California borrowers with a private cause of action to enforce the protections granted by the National Mortgage Settlement and subsequent new servicing standards mandated by the Consumer Financial Protection Bureau (“CFPB”).
In Sese v. Wells Fargo Bank, Daniel Sese received a Notice of Default on his Fair Oaks, California, home in January 2013. He then applied for mortgage assistance from Wells Fargo. On May 9, 2013, Sese received a letter from the bank stating that all his documentation had been received and that he was being considered for a loan modification. Two days later — on May 11, 2013 — Sese received another letter from Wells Fargo notifying him that his home was scheduled to be sold on June 4, 2013. Sese provided evidence to the court that he never received written notification from Wells Fargo that his loan modification application had been rejected.
Under Civil Code §2923.6(c), lenders are prohibited from proceeding with a foreclosure sale when a loan modification application is pending. A lender must provide written notice to a borrower that he or she is not eligible for a loan modification before proceeding with a foreclosure.
The court found that it was likely that Sese would prevail on his claim and would suffer great injury if his home was sold. Therefore, the court granted the preliminary injunction enjoining the foreclosure sale of his residence.
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