A Sacramento County Superior Court has granted a preliminary injunction to halt Wells Fargo from foreclosing on a home, where it found it likely that the homeowner would be successful on his claim that the bank engaged in improper “dual tracking” in violation of the California Homeowners Bill of Rights (“HBOR”) and he would suffer great injury if the home was sold.

If a lender simultaneously considers a borrower for a mortgage loan modification and proceeds with a foreclosure action such conduct constitutes “Dual tracking.” HBOR was instituted in January 2013 and gives California homeowners a private right to enforce the protections granted by the National Mortgage Settlement and subsequent new servicing standards mandated by the Consumer Financial Protection Bureau (“CFPB”).

In the Sacramento action, Sese v. Wells Fargo Bank, Sese received a Notice of Default on his Fair Oaks, California, home and promptly applied for mortgage assistance from the lender. Wells Fargo sent a letter to Sese that acknowledged all his documentation had been received and that he was being considered for a loan modification. However, two days later Sese received another letter from Wells Fargo that advised his home was scheduled to be sold. Sese proved 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 Sese would likely prevail on his claim and would suffer great injury if his home was sold. Therefore, the court granted the preliminary injunction.

If you or someone you know was subjected to “Dual Tracking,” never denied a loan modification but their house was foreclosed and sold while the loan modification request was pending, have them contact legal counsel. They may very well be entitled to stop the foreclosure if pending or recover significant damages if the house has already been sold in a foreclosure sale.

The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.