Conroy v. Wells Fargo Bank, N.A.

A loan servicer owes a borrower no duty of care in handling his home loan modification application; also, unless the borrower documents a change in financial circumstances, dual tracking prohibitions do not apply to second/subsequent loan modification requests, even if the lender accepts, processes, and reviews the later loan applications.  This decision holds that a loan servicer owes a borrower no duty of care in handling or evaluating a loan modification application.  The Biakanja factors were designed to determine whether a tort duty is owed in the absence of contractual privity.  But there is contractual privity in the loan situation, so Biakanja does not apply, and the parties’ rights are governed by their contract.  The decision also holds that unless the borrower documents a change in financial circumstances, the dual tracking prohibitions of Civ. Code 2923.6 do not apply to second or subsequent loan modification requests, even if the lender accepts, processes and reviews the later loan applications.  Finally, the decision holds that a loan servicer is not required to provide a single point of contact under Civ. Code 2923.7 unless the borrower requests one.

California Court of Appeals, Third District (Hoch, J.); July 28, 2017; 2017 WL 3205559

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