Keeping People in Their Homes
In late 2014, a Sacramento couple represented by the personal injury attorneys at Fry Law Corporation submitted a loan modification application to Wells Fargo. After months and months of the review process, they received a denial. The denial simply read “we do not have contractual authority to modify your loan because of limitations in our servicing agreement.” The denial did not provide any detail whatsoever to those limitations. No explanation. Nothing.
At Fry Law, we have seen hundreds of loan modification denials with this “explanation.”
If you have been following Fry Law Corporation, you know that we are strong and aggressive advocates of the Homeowner Bill of Rights (“HBOR” – Civil Code Section 2923, et seq.). You will also know that we really hate Wells Fargo Bank for their predatory practices in Sacramento.
An important section of the HBOR requires that if a loan modification application is denied, the bank must provide a detailed written explanation of why. (See Section 2923.6(f) and pasted below for your reference.
“(f) (2) Following the denial of a first lien loan modification application, the mortgage servicer shall send a written notice to the borrower identifying the reasons for denial, including the following…If the denial was based on investor disallowance, the specific reasons for the investor disallowance.”
The Lower Court “found” no wrongdoing in the denial. Fry Law Corporation did not agree AT ALL. We appealed the ruling to the Third District Court of Appeal.
After several years on appeal, the Court finally got to our case. Once they reviewed our case, the panel sided with us, not Wells Fargo. The Appeals Court held that: “We will reverse the judgment of dismissal….the explanation that “[we] do not have the contractual authority to modify your loan because of limitations in our servicing agreement,” does not suffice as an explanation…the statement is ambiguous and appears to imply the investor has not allowed the modification. If that is the case, subdivision (f)(2) requires the “specific reasons for the investor disallowance.” As is, the explanation appears to communicate little more than the modification was denied because the investor did not want to approve it.”
This is a massive victory for our clients and for Homeowners throughout the State of California. When banks such as Wells Fargo issue baseless denials, they will no longer be tolerated.
This was such an incredible win for two reasons. The first is that the case establishes precedence. At least two other law firms in California have written the Court of Appeal to request that this case be published in law books to help guide attorneys and judges on how to properly interpret the law. The second is it arms our clients with the tools to fight big banks. We don’t kowtow to large interests; we stand up for what’s right.
Chris Fry, Esq. is a civil litigation attorney based in Sacramento, CA where he runs Fry Law Corporation with a focus on personal injury, contract law, foreclosure and civil litigation.