Foreclosure Defense

Another successful TILA case is Patel v. Mortgage Electronic Registration Systems, Inc., 2012 WL 1087158 (C.D. Cal. Mar. 30, 2012). In this case, the homeowner had a silent second mortgage held by Mortgage Electronic Registration Systems (MERS). MERS did not provide the homeowner with regular mortgage statements, and continued to charge interest on the loan. The homeowner brought a lawsuit against MERS, alleging violations of TILA and other laws. The court found that MERS had violated TILA by failing to provide the homeowner with accurate and timely mortgage statements. The court also found that MERS had violated California’s Rosenthal Fair Debt Collection Practices Act by engaging in unfair and deceptive business practices. As a result of these findings, the court awarded the homeowner damages for the interest that was improperly charged by MERS, as well as statutory damages and attorney’s fees. This case demonstrates how TILA can be used to protect homeowners from predatory lending practices and to hold lenders accountable for their actions. Negligence Alvarez v. BAC Home Loans Servicing, L.P. is a California case that resulted in a successful negligence lawsuit against a lender by a homeowner facing foreclosure. The case was filed in 2010 and ultimately went to trial in 2014. In this case, the plaintiff, Mr. Alvarez, was facing foreclosure on his home, which he had purchased with a subprime mortgage. He sought a loan modification from his lender, BAC Home Loans Servicing, but was denied. Mr. Alvarez claimed that BAC had negligently evaluated his loan modification application, and that this negligence led to his eventual foreclosure. To prove his case, Mr. Alvarez needed to satisfy the four elements of a negligence claim, which are:

• Duty of care: the defendant owed a duty of care to the plaintiff
• Breach of duty: the defendant breached their duty of care
• Causation: the defendant’s breach of duty caused harm to the plaintiff
• Damages: the plaintiff suffered actual damages as a result of the harm caused by the defendant’s breach of duty

The court in Alvarez v. BAC ultimately found in favor of the plaintiff, stating that BAC had breached its duty of care by negligently evaluating Mr. Alvarez’s loan modification application. The court also found that this negligence was the cause of Mr. Alvarez’s eventual foreclosure. One key factor in the case was the fact that BAC had entered into a consent judgment with the state of California in a separate case, which required the lender to follow certain procedures when evaluating loan modification applications. The court in Alvarez v. BAC found that BAC’s failure to follow these procedures was a breach of its duty of care to Mr. Alvarez. It’s worth noting that not all cases involving foreclosure and negligence will have the same outcome as Alvarez v. BAC. Each case will depend on its own set of facts and circumstances. However, this case is a useful example of how a negligence claim may be successful in a foreclosure defense case. There are other examples of when a negligence claim against a lender was successful in California. Here are a few:

• Dominguez v. Washington Mutual Bank (2008): In this case, the plaintiff alleged that the lender breached its duty of care by approving a loan that the plaintiff could not afford. The plaintiff also alleged that the lender failed to properly disclose the terms of the loan. The court held that the plaintiff had presented sufficient evidence to establish a prima facie case of negligence and that a triable issue of fact existed as to whether the lender breached its duty of care.
• Nymark v. Heart Fed. Savings & Loan Assn. (1991): In this case, the plaintiff alleged that the lender failed to disclose material information about the loan and misled the plaintiff about the interest rate. The court held that the lender had a duty to disclose material information and that the plaintiff had presented sufficient evidence to establish a prima facie case of negligence.
• Lueras v. BAC Home Loans Servicing LP (2013): In this case, the plaintiff alleged that the lender breached its duty of care by misrepresenting the terms of the loan and failing to provide the plaintiff with accurate information. The court held that the plaintiff had presented sufficient evidence to establish a prima facie case of negligence and that a triable issue of fact existed as to whether the lender breached its duty of care.

In all of these cases, the plaintiffs were able to establish that the lender had a duty of care, that the lender breached that duty, and that the breach caused harm to the plaintiff. The facts and circumstances of each case were unique, but they all involved allegations of improper conduct by the lender, such as failing to disclose material information or misrepresenting the terms of the loan.

Breach of Contract
there have been cases where breach of contract was successfully used by a homeowner facing foreclosure. Here are a few examples:

• Glaski v. Bank of America (2013): In this case, the borrower alleged that the bank had breached the terms of the pooling and servicing agreement (PSA) that governed the securitized trust that held the borrower’s loan. The borrower argued that the bank did not transfer the loan into the trust before the closing date, as required by the PSA. As a result, the bank did not have standing to foreclose on the property. The court held that the borrower had standing to challenge the foreclosure on the basis of the bank’s alleged breach of the PSA.
• Jenkins v. JPMorgan Chase Bank (2013): In this case, the borrower alleged that the bank had breached the terms of the trial loan modification agreement (TLMA) that the parties had entered into. The borrower argued that the bank had promised to modify the loan permanently if the borrower complied with the terms of the TLMA, but the bank failed to do so. The court held that the borrower had stated a claim for breach of contract and allowed the case to proceed.
• Singh v. Bank of America (2014): In this case, the borrower alleged that the bank had breached the terms of the loan modification agreement (LMA) that the parties had entered into. The borrower argued that the bank had promised to modify the loan permanently if the borrower complied with the terms of the LMA, but the bank failed to do so. The court held that the borrower had stated a claim for breach of contract and allowed the case to proceed.

In all of these cases, the borrowers were able to show that the bank had breached a contract that governed the loan or the foreclosure process. The courts allowed the cases to proceed and gave the borrowers an opportunity to prove their claims.