Berman v. HSBC Bank USA, N.A.

A loan servicer violates Civil Code section 2923.6 by sending the borrower a loan modification denial letter erroneously stating that the borrower has only 15 days to appeal the denial.  Civil Code 2923.6 proscribes dual tracking—proceeding with foreclosure while a complete loan modification application is under review.  The section also requires a loan servicer to notify the borrower, on denying an application for a loan modification, that the borrower may appeal the decision, and the notice must also state the deadline for filing the appeal.  The statute requires that the deadline be at least 30 days after the date the borrower is sent the written denial of the loan modification application.  This decision holds that a servicer violates the section by sending the borrower a notice of denial that erroneously states he must appeal within 15 days, rather than 30.  Furthermore, upon receiving the erroneous letter, the borrower is entitled to an injunction against foreclosure under Civil Code 2924.12(a) until the servicer cures the violation by sending a new notice of denial that sets a correct 30 day deadline for appealing the denial.

California Court of Appeal, Third District (Robie, Acting P.J.); April 11, 2017 (published May 3, 2017); 2017 WL 1325848


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