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Servicer Violated Borrower’s Rights by Foreclosing While Processing a Loan Modification.

Posted on: August 20, 2016

In the case Valbuena v. Ocwen Loan Servicing (2015) 237 Cal. App. 4th 1267, the appellate court reversed the trial court judgment in favor of a loan servicer who foreclosed on the borrower’s house despite a pending loan modification application.

Initially, the trial court ruled in favor of Ocwen after the borrower sued for wrongful foreclosure. However, the Court of Appeal ruled that because a loan modification application had been submitted three days after the receipt of a letter offering the modification service and specially requested documents which were transmitted Ocwen on the day of request; there was enough evidence to allege that a complete loan modification survey was pending at the time. The actions of the servicer violated Civ. Code § 2923.6, which protects the borrower from foreclosure when a loan modification application is pending.

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