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The LAWSUIT (so far) and in all its Pleadings Complaint Glory

The 72 year old Borrower, who has a history of heart disease and has had 3 heart surgeries, had to close his sole-proprietor business on May 2020 for fear of catching COVID and dieing.

This loss of business income would make it difficult for the Borrower to pay his mortgage. Putting in jeopardy the ability of he and his 88 year-old tenant of staying in their home.

So after 11 years of making every monthly mortgage payment and on time, - in order to qualify for Forbearance and to apply for a Loan Modification or Deferral, --  he stopped making payments on May 2020.

Eventually, after complying with every request from the Servicer, he was approved for Forbearance. The application was complete.

The Borrower went through a process, requested by defendants, to make trial payments of $1,365.38 for 3 months in 2020 October, November, December.
The Borrower made those payments.
He was given optimism that it would progress to a LOAN MODIFICATION or DEFERRAL. It did not.

The application for LOAN MODIFICATION or DEFERRAL was denied on Jan 27^th 2021 and on Mar 18 2021 an Appeal from the Borrower was not only allegedly denied but as good as ignored.

On April 22^nd 2021 a Request for Information and Clarification from the Borrower was also as good as ignored.

A subsequent Information Request was .....

A subsequent Notice of Error was .....

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• Ca CivCode 2923.5 Notice of Default Rules •
• CFR 1024.35 - Error resolution procedures •
• COVID Homeowner Relief Act •
• Reinstate the Loan •

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Mabry v Superior Court

Promissory Estoppel is viable here where all of the following required facts exist:

1. a clear and unambiguous promise
2. reasonable and foreseeable reliance by the party to whom the promise was made
3. substantial detriment or injury, caused by the reliance on the promise
4. damages measured by the extent of the obligation assumed and not performed

US Ecology Inc vs State (2005) 129 Cal.App 4th 887, 901
Toscano vs Greene Music (2004) 124 Cal.App 4th 685, 692

Defendants repeatedly made unambiguous and clear promises to "Help Borrower stay in his home" but did nothing towards that end.

LOSS MITIGATION For the purposes of this CAUSE of ACTION, it is necessary to define LOSS MITIGATION.
In the case of a  LOAN MODIFICATION, Loss Mitigation is reduction of interest rate giving lower monthly payments.
For a DEFERRAL it is " forgiveness " of missing payments to defer them to the end of a re-amortized loan.
 In both cases the Borrower's lost income is mitigated (  made less severe, serious, or painful ).

But in this case, here, where the offered REPAYMENT PLAN requires 1.5 times the monthly payment over 24 months and at the end continue with the same monthly payment at the same high interest rate, 4.625%, -- NOTHING is mitigated. There is no lessening of the severity or seriousness of the Borrower's lost income.

 In fact the more accurate description would be "disregard of the Borrower's need, solely in favor of the Lender's desire". Nothing has been done to "Help the Borrower stay in his home" as promised in many correspondences and on the telephone. (the many letters from the Servicer, containing this statement, are not attached but will be produced in court should the defendants deny this).
Without a Loan Modification or Deferral the Borrower has be given no help.

Defendants repeatedly telling the Borrower that they will help him stay in his home IS an actionable promise which induced reliance. ( And certainly is not fulfilled by this REPAYMENT PLAN )

(Mentioning here that the 3 month trial payments -- may also have induced reliance -- may be relevant but also may dilute the primary argument of the many "stay in your home" promises.

 The Borrower went through a process, requested by defendants, to make trial payments of $1,365.38 for 3 months in 2020 October, November, December.
 The Borrower made those payments.
He was given optimism that it would progress to a LOAN MODIFICATION or DEFERRAL.

The Trial Payments had no relevance.
As a result the Borrower was considerably disappointed.    

VALENCIA vs WELLS FARGO BANK

 Promissory Estoppel

 Under the promissory estoppel doctrine, a promise is made to induce action or forbearance on the part of the promisee, causing detrimental reliance by the promisee. (Platt Pacific, Inc. v. Andelson (1993) 6 Cal.4th 307, 320–321.)

 To be binding, the promise “ ‘must be clear and unambiguous.’ ” (Cotta v. City and County of San Francisco (2007) 157 Cal.App.4th 1550, 1566; CalFarm Ins. Co. v. Krusiewicz (2005) 131 Cal.App.4th 273, 284.)

  Estoppel is disfavored, so it is incumbent on the person asserting it to leave nothing to surmise. (Landberg v. Landberg (1972) 24 Cal.App.3d 742, 758–759.) The doctrine is simply “ ‘inapplicable where no clear promise is made.’ ” (Lange v. TIG Ins. Co. (1998) 68 Cal.App.4th 1179, 1185.)

Plaintiffs have not shown a clear and unambiguous promise meant to induce reliance.

 Preliminary negotiations or discussions between borrower and lender cannot form the basis for an estoppel: they are not sufficiently precise. (Laks v. Coast Fed. Sav. & Loan Assn. (1976) 60 Cal.App.3d 885, 891.)

 The Bank did not promise to modify plaintiffs' loan and had no obligation to alter its contract with plaintiffs. Telling a borrower that a loan modification application is under review and no sale was scheduled is not an actionable promise. (Granadino v. Wells Fargo Bank, N.A. (2015) 2015 Cal.App. LEXIS 361, at pp. *7–8, 2015 WL 1929455

1. breach of the implied covenant of good faith and fair dealing and
2. unfair business practices

But not only are the Defendants betraying their promise to the Borrower -- but to the Consumer Protection Agencies of the State and Federal Governments -- to which they are misrepresenting  their help of borrowers staying in their homes. ( breach of the implied covenant of good faith & fair dealing and unfair business practices )

unfair business practices:  “impairs the state polic[ies]” of  keeping consumers in their homes.

Plaintiff must show either:

1. unlawful, unfair or fraudulent business act or practice
2. unfair, deceptive, untrue or misleading advertising and the claim must be supported with facts described with reasonable particularity

Defendants acts are unfair, deceptive and misleading .

1.  wrongful foreclosure;
2.  violation of California Civil Code § 2924(a)(6); (
3.  violation of California Business and Professions Code § 17200,
4.  breach of the covenant of good faith and fair dealing;
5.  violation of California Civil Code § 2923.6. Id. ¶¶ 62-126.
6.   violation of section 2924.17, subdivision (a) (the HBOR’s accuracy requirements for foreclosure documents);
7.  cancellation of instrument (pertaining to the Corporation Assignment of Deed of Trust); 

courts have awarded borrowers attorneys’ fees as the prevailing party under section 2924.12(i) – simply by obtaining a temporary restraining order premised on HOBR claims. It is clear from Potocki that lenders should be mindful of these issues when crafting their loss mitigation correspondence.
To avoid similar challenges to their denial letters, lenders should consider referencing specific guidelines in their servicing agreement as the “specific reasons for the investor disallowance.” - United Trustees  Assoc. Winter 2019

1. Negligence and
2. violation of the California Homeowner Bill of Rights ( HBOR);
3. violation of section 2923.6, subdivision (f) (the HBOR’s requirements for written denial of a loan modification);

Duty of Care was required and defendants violated HBOR 

( insert most of the TRO ARGUMENT here )

Note that all of the California law in CA Homeowner Bill of Rights overrules the arguments AGAINST Duty of Care in ROSSETTA vs CITIMORTGAGE  imo -- where the HBOR requires "duty of care" for 

1. "specific" and thus valid "reasons for the investor disallowance" which is demanded and laid out in detail in the HBOR.
2. the required process of APPEAL (which was ignored)

        And the Borrower's application for Loan Modification or Deferral is COMPLETE.

So what is the point of CA Government Legislation advocating an APPEAL PROCESS when the lender -- not only need not address any part of the Appeal but can in fact ignore that it even exists?

This lack of care is negligence and  is not compliant with the law( Potocki v. Wells Fargo)

Defendants materially violated California HBOR, Civil Code 2923.6,f,2 and CFR§1024.41(d) – where:

1. No valid reason was given for denial of MODIFICATION IN GOOD STANDING

2. No “specific reasons” were given for the “investor disallowance” (Denial of TRIAL MODIFICATION and DEFERRAL by only offering an option of REPAYMENT PLAN)

3. The required process of APPEAL was ignored

4. The REQUEST FOR INFORMATION and CLARIFICTION was ignored.

Potocki v. Wells Fargo Bank -- investor disallowance Case C081345

2923.6(f)  the servicer’s explanation that it “do[es] not have the contractual authority to modify [the] loan because of limitations in [its] servicing agreement” was not sufficiently detailed, and that without knowing the actual reason for denial, it could not be said for certain that the failure to provide “specific reasons for the investor disallowance” as required under section 2923.6(f) was not material.  ,
 The appellate court concluded that the statement was ambiguous and did not suffice as an explanation – at least for the purposes of a demurrer.
The explanation appears to communicate little more than the modification was denied because the investor did not want to approve it.”
The letter generally denying the modification was not compliant with the law.

 Both:

1. "do[es] not have the contractual authority to modify [the] loan because of limitations in [its] servicing agreement”  
and  
2. "because you were approved for another loss mitigation option based on investor and/or regulatory rules."

 are ambiguous, not sufficiently detailed, and give no actual or valid reason for denial and are not compliant with the law.

Defendants could be liable for extensive damages should plaintiffs property be sold in foreclosure after violating  § 2923.6.
Potocki v. Wells Fargo Minutes: since the demurrer to the first cause of action (Violation of Civil Code § 2923.6 ) is overruled, and both parties are in agreement that this  wrongful foreclosure cause of action is predicated on either cause of action, the demurrer to the wrongful foreclosure cause of action is overruled.

 To state a cause of action for negligence, a plaintiff must allege

1.  the defendant owed the plaintiff a duty of care,

2.  the defendant breached that duty, and

3.  the breach proximately caused the plaintiff's damages or injuries.’ ”

The court concluded that when a lender agrees to consider a borrower's application for a loan modification, the Biakanja factors weigh in favor of imposing a duty of care. ((Alvarez, supra, 228 Cal.App.4th at  p. 948, 176 Cal.Rptr.3d 304.) ROSSETTA vs CITIMORTGAGE

  (Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1180 (Daniels).)

 In order to enter FORBEARANCE Borrower was required to stop payment for 3 months ( go into default). A policy of making default a condition of being considered for a loan modification. Makes the Biakanja test weigh in favor of finding a duty of care.

 QUACH vs SPECIALIZED LOAN SERVICING
This court applied the six-factor Biakanja test to conclude a lender owed a borrower a duty of care in processing the borrower's loan modification requests. (Daniels, supra, 246 Cal.App.4th at p. 1183.)

The Defendants violations are extensive enough,  whether they subsequently correct them or not, and in the PUBLIC INTEREST, plaintiff asks the Court to order the remedy requested   in the ORDER..

The state of California has a clear interest in protecting citizens from being dispossessed of their homes in violation of California law, which is evident from the language of the California Homeowner’s Bill of Rights and the cases interpreting those statutes.

preliminary injunction

Code of Civil Procedure section 526 and 527 – you must establish “irreparable injury or interim harm" if injunction not issued pending litigation.
The Court will consider

1. (1) likelihood of your success on the merits;
2. (2) possible irreparable harm to you if not granted;
3. (3) balance of hardships on the parties.

Basically the same argument that is used in the TRO. There are plenty of good examples online, for example saclaw.org has lots of templates. But find it in the Complaint Pleadings

1st Potocki v. Wells Fargo Bank Complaint filed 2008 (along with bankruptcies - plaintiffs postponed foreclosure for over 4 years) -- cant find case number

PRECEDENT

2nd Potocki v. Wells Fargo Bank  2014 Case: 00160873 Sacramento (dropped their 2008 case and sued again - to stop sale !)

  investor disallowance CA Appellate Case C081345  https://www.courts.ca.gov/opinions/archive/C081345.PDF

Sacramento search by Filing Date from Jan 1 2008 to Dec 31st 2008 - nothing 

2923.6(f)  the servicer’s explanation that it “do[es] not have the contractual authority to modify [the] loan because of limitations in [its] servicing agreement” was not sufficiently detailed, and that without knowing the actual reason for denial, it could not be said for certain that the failure to provide “specific reasons for the investor disallowance” as required under section 2923.6(f) was not material.  ,

 the servicer’s denial for a HAMP modification, which explained that “[we] do not have the contractual authority to modify your loan because of limitations in our servicing agreement.” 
 The appellate court concluded that the statement was ambiguous and did not suffice as an explanation – at least for the purposes of a demurrer.
The explanation appears to communicate little more than the modification was denied because the investor did not want to approve it.”
The letter generally denying the modification was not compliant with the law.
Although the servicer argued that the purported violation was not material, as is required for a borrower to bring a claim for injunctive relief under section 2923.6 when a deed upon sale has not yet been recorded, the appellate court disagreed, reasoning that it could not determine whether the failure to provide “reasons for the disallowance” was not material without knowing the investor’s actual reason for denying the HAMP modification.

A per se duty of care is also owed under California’s Homeowner Bill of Rights.

DISMISSED: the borrowers’ claims that their written denials were insufficiently detailed to comply with section 2923.6(f) on the basis that the borrowers’ allegations were vague and they failed to provide authority that anything more was required.

they were offered a loan modification in exchange for agreeing to make three trial payments of $1,633.53. (A non-Hamp Trial Payment Plan offer)
The borrowers completed the trial payments but were not offered a modification, which led to the servicer recording a notice of default three months later. 
 --- completion of trial payments would result only in a review for a loan modification based on investor approval. The borrowers’ argument that the temporary payment plan, which led them to believe a permanent modification was forthcoming, was tantamount to a binding contract was rejected by the trial court

For pleadings see GLEN MATTHEWS JR v. SPECIALIZED LOAN SERVICING ( tho he lost)

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LIWANAG v. BANK OF AMERICA, N.A The Denial Letter fails to provide "specific reasons" for the investor disallowance;  The Denial Letter essentially says that Plaintiffs' application for a loan modification was denied because the investor did not want to approve the application. In other words, the application was denied because the investor wanted to deny it. 

1.  First, Plaintiffs pray for relief in the form of "general and specific damages" and "civil penalties" arising from BANA's violation of HBOR. (FAC ¶¶ 59-60.)
   Assuming Plaintiffs prevail on this claim, they would be entitled to actual economic damages and statutory damages only if the servicer violated section 2923.6 and then recorded a trustee's deed upon sale. 
   See Cal. Civ. Code § 2924.12(b). In circumstances where no trustee's deed upon sale has been recorded, a party is only entitled to an injunction for the purpose of "enjoin[ing] a material violation" of section 2923.6(f) until "the court determines that [BANA] has corrected and remedied the violation or violations giving rise to the action for injunctive relief." See Cal. Civ. Code § 2924.12(a)(1)-(2).
   Here, Plaintiffs do not allege that a trustee's deed upon sale has been recorded or that they have defaulted on their loan; rather, they only allege that BANA's loan modification application processes were faulty or technically non-compliant. Thus, based on the allegations of the FAC, Plaintiffs would only be entitled to injunctive relief if they prevailed on this claim.

2. Second, though BANA does not make this argument in its Motion, section 2923.6 contains a safe harbor provision for certain signatories to a settlement entered in the case entitled "United States of America et al. v. Bank of America Corporation et al., filed in the United States District Court for the District of Columbia, case number 1:12-cv-00361 RMC," providing that any signatory thereto that remains in compliance with the terms of the settlement shall have "no liability for a violation of Section . . . 2923.6. . . ." See Cal. Civ. Code § 2924.12(g). It is unclear if BANA is a signatory to the settlement or if it is still in compliance with the settlement.
   In any case, courts have declined to allow signatories to use the settlement as a sword to fell claims on a motion to dismiss, instead finding that section 2924.12(g) is an affirmative defense. 
   See Rijhwani v. Wells Fargo Home Mortg., Inc., 2014 WL 890016, at *9 (N.D. Cal. Mar. 3, 2014)
   ("Wells Fargo's argument fails at the motion to dismiss stage, however, because this safe harbor, so to speak, appears to be an affirmative defense to be raised on summary judgment and for which Wells Fargo has the burden of proof."); 
   Segura v. Wells Fargo Bank, N.A., 2014 WL 4798890, at *5 (C.D. Cal. Sept. 26, 2014). Thus, while this argument may not be used to dismiss Plaintiffs' claims at this stage, it may well preclude recovery on these claims in the future.

Finally, remedies available pursuant to section 2924.12 may only be imposed where there is a "material" violation of an HBOR statute. Cal. Civ. Code § 2924.12(a)(1), (a)(2), and (b).
Courts have recognized "there is a dearth of authority interpreting the meaning of `material.'" 
Greene v. Wells Fargo Bank, N.A., 2015 WL 2159460, at *3 (N.D. Cal. May 7, 2015).
For this reason, these courts have been hesitant to dispose of a claim at the motion to dismiss phase, even where the defendant contends its breach of the statute is not material. 
See id. ("In the absence of any authority defining the meaning of a "material violation," the Court declines to impose any additional pleading obligations on Plaintiff.").
The Court also declines to dismiss Plaintiffs' HBOR claims solely on the grounds that Plaintiffs' alleged violations were not material.

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 ROSSETTA vs CITIMORTGAGE

 6California Courts of Appeal have not settled on a uniform application of the Biakanja factors in cases that involve a loan modification.

 Although *638 lenders have no duty to offer or approve a loan modification (Lueras, supra, 221 Cal.App.4th at p. 68, 163 Cal.Rptr.3d 804; Jolley, supra, 213 Cal.App.4th at p. 903, 153 Cal.Rptr.3d 546), courts are divided on the question of whether accepting documents for a loan modification is within the scope of a lender's conventional role as a mere lender of money, or whether, and under what circumstances, it can give rise to a duty of care with respect to the processing of the loan modification application.

 (Compare Lueras, supra, 221 Cal.App.4th at p. 67, 163 Cal.Rptr.3d 804 [residential loan modification is a traditional lending activity, which does not give rise to a duty of care] with Alvarez v. BAC Home Loans Servicing, L.P. (2014) 228 Cal.App.4th 941, 948, 176 Cal.Rptr.3d 304 (Alvarez) [servicer has no general duty to offer a loan modification, but a duty may arise when the servicer agrees to consider the borrower's loan modification application], Daniels, supra, 246 Cal.App.4th at pp. 1180-1183, 201 Cal.Rptr.3d 390 [following Alvarez and applying Biajanka factors to conclude that lender owed borrowers a duty of care in the loan modification process] and Jolley, supra, at p. 906, 153 Cal.Rptr.3d 546 [commercial lending creates a special relationship, thereby creating a duty of care].)

 Federal district courts in California have also reached different results. (Compare, e.g., Marques v. Wells Fargo Bank, N.A. (N.D. Cal. Oct. 13, 2016, No. 16-cv-03973-YGR), 2016 U.S. Dist. Lexis 142193, p. *19 [servicers do not owe borrowers a duty of care in processing loan modification applications], Garcia v. PNC Mortgage (N.D. Cal. Sept. 16, 2015, No. 14-cv-3543-PJH), 2015 U.S. Dist. Lexis 123920, p. *9 [“a servicer, as any financial institution, owes no duty of care to a borrower in the provision of ordinary financial services such as loan modifications”], 
Hernandez v. Select Portfolio Servicing, Inc. (C.D. Cal. June 25, 2015, No. CV 15-01896 MMM (AJWx)) 2015 U.S. Dist. Lexis 82922, p. *56 [“a lender that agrees to consider a borrower's loan modification application does not act outside its conventional role as a money lender and does not owe a duty of care”] ) with **606 Segura v. Wells Fargo Bank, N.A. (C.D. Cal. Sept. 26, 2014, No. CV-14-04195-MWF (AJWx)) 2014 U.S. Dist. Lexis 143038, pp. *32-33[a duty of care exists once the lender offers a borrower the opportunity to apply for a loan modification], 
Penermon v. Wells Fargo Home Mortgage (N.D. Cal. Aug. 28, 2014, No. 14-cv-00065-KAW), 47 F.Supp.3d 982, 2014 U.S. Dist. Lexis 121207, pp. *13-14 [“once [defendant] provided Plaintiff with the loan modification application and asked her to submit supporting documentation, it owed her a duty to process the completed application once it was submitted”), and Johnson v. PNC Mortgage (N.D. Cal. 2015) 80 F.Supp.3d 980, 985-986 [“Once PNC offered the Johnsons an opportunity to modify their loan, it owed them a duty to handle their application with ordinary care”].)

 Although the Ninth Circuit has signaled that it may view the “no duty” line of cases as more persuasive (see, e.g., Anderson v. Deutsche Bank Nat'l Trust Co. Ams. (9th Cir. 2016) 649 Fed.Appx. 550, 552 [loan servicer has no common law duty to approve application within a particular *639 time frame] ), the federal appellate court has declined to certify the question to our Supreme Court, which has yet to speak to the issue. (Id. at p. 552, fn. 1.)

 The trial court relied on Lueras to hold that “lenders do not have a common law duty of care ... to offer, consider, or approve a loan modification, to offer foreclosure alternatives, or to handle loans so as to prevent foreclosure.” In Lueras, the plaintiff borrower alleged the defendant lender breached its duty of care by “ ‘failing to timely and accurately respond to customer requests and inquiries,’ by ‘failing to comply with state consumer protection laws, properly service the loan, and use consistent methods to determine modification approvals,’ ” among other things. (Lueras, supra, 221 Cal.App.4th at p. 63, 163 Cal.Rptr.3d 804.) The Court of Appeal for the Fourth District, Division Three, concluded that lenders do not owe a duty of care in considering or approving loan modification applications, reasoning that “a loan modification is the renegotiation of loan terms, which falls squarely within the scope of a lending institution's conventional role as a lender of money.” (Id. at p. 67, 163 Cal.Rptr.3d 804.)

 Applying the Biakanja factors, the court explained: “If the modification was necessary due to the borrower's inability to repay the loan, the borrower's harm, suffered from denial of a loan modification, would not be closely connected to the lender's conduct. If the lender did not place the borrower in a position creating a need for a loan modification, then no moral blame would be attached to the lender's conduct.” (Lueras, supra, 221 Cal.App.4th at p. 67, 163 Cal.Rptr.3d 804.) Accordingly, the court concluded the Biakanja factors weighed against the imposition of a common law duty of care. (Ibid.) However, the court recognized that “a lender does owe a duty to a borrower to not make material misrepresentations about the status of an application for a loan modification or about the date, time, or status of a foreclosure sale.” (Id. at p. 68, 163 Cal.Rptr.3d 804.)

 Rossetta contends the trial court erred in relying on Lueras, claiming that Alvarez is the better reasoned decision. In Alvarez, the plaintiffs alleged the lender breached its duty of care by failing to review their loan modification applications in a timely manner, foreclosing on their properties while they were under consideration for a HAMP modification, misplacing their applications, and mishandling them by relying on incorrect salary information. (Alvarez, supra, 228 Cal.App.4th at p. 945, 176 Cal.Rptr.3d 304.)

 The Court of Appeal for the First District, Division Three, acknowledged the general rule, but observed that, “ ‘ “Nymark and the cases cited therein do not purport to state a legal principle that a lender can never be held liable for negligence in its handling of a loan transaction **607 within its conventional role as a lender of money.” ’ ” (Id. at p. 946, 176 Cal.Rptr.3d 304, citing Jolley, supra, 213 Cal.App.4th at p. 902, 153 Cal.Rptr.3d 546.)

 Applying the Biakanja factors, the court found: “The transaction was intended to affect the plaintiffs and it was entirely foreseeable that failing to *640 timely and carefully process the loan modification applications could result in significant harm to the applicants.” (Alvarez, supra, 228 Cal.App.4th at p. 948, 176 Cal.Rptr.3d 304.)

 With regard to the connection between the defendant's conduct and the injury suffered, the court found: “ ‘Although there was no guarantee the modification would be granted had the loan been properly processed, the mishandling of the documents deprived [the plaintiffs] of the possibility of obtaining the requested relief.’ ” (Id. at p. 949, 176 Cal.Rptr.3d 304.)

 With respect to blameworthiness, the court found: “The borrower's lack of bargaining power, coupled with conflicts of interest that exist in the modern loan servicing industry, provide a moral imperative that those with the controlling hand be required to exercise reasonable care in their dealings with borrowers seeking a loan modification.” (Ibid.)

 Finally, the court found that the policy of preventing future harm strongly favored the imposition of a duty of care after the California Homeowner Bill of Rights was effectuated on January 1, 2013. (Id. at p. 950, 176 Cal.Rptr.3d 304.)

 Accordingly, the court concluded that when a lender agrees to consider a borrower's application for a loan modification, the Biakanja factors weigh in favor of imposing a duty of care. (Id. at p. 948, 176 Cal.Rptr.3d 304.)

 Pending guidance from our Supreme Court, we are persuaded by the reasoning in Alvarez. We find support for our conclusion in Meixner v. Wells Fargo Bank, N.A. (E.D. Cal. 2015) 101 F.Supp.3d 938, in which the federal district court, addressing the split in authority, observed: “Alvarez identified an important distinction not addressed by the Lueras reasoning—that the relationship differs between the lender and borrower at the time the borrower first obtained a loan versus the time the loan is modified.

 The parties are no longer in an arm's length transaction and thus should not be treated as such.

 While a loan modification is traditional lending, the parties are now in an established relationship. This relationship vastly differs from the one which exists when a borrower is seeking a loan from a lender because the borrower may seek a different lender if he does not like the terms of the loan.” (Id. at p. 954.)

 78Based on the foregoing, we are convinced that a borrower and lender enter into a new phase of their relationship when they voluntarily undertake to renegotiate a loan, one in which the lender usually has greater bargaining power and fewer incentives to exercise care. (See Alvarez, supra, 228 Cal.App.4th at p. 949, 176 Cal.Rptr.3d 304 [during loan modification negotiations, “ ‘borrowers are captive, with no choice of servicer, little information, and virtually no bargaining power ... [while] servicers may actually have positive incentives to misinform and under-inform borrowers’ ”].)

 We do not hold that a duty of care arises merely because a lender receives or considers a loan modification application. Nor do we hold, as the concurring opinion suggests, that a duty of care may arise solely by virtue of the parties’ changing relationship. Rather, we conclude that the change in the parties’ relationship can and should be factored into our application of the Biakanja factors. To this end, *641 we find it significant that CitiMortgage allegedly refused to consider Rossetta's loan modification application until she was three months behind in her **608 mortgage payments.

 By making default a condition of being considered for a loan modification, CitiMortgage did more than simply enhance its already overwhelming bargaining power; it arguably directed Rossetta's behavior in a way that potentially exceeds the role of a conventional lender. (See, e.g., Gerbery v. Wells Fargo Bank, N.A. (S.D. Cal. July 31, 2013, No. 13-CV-614-MMA (DHB)) 2013 U.S. Dist. Lexis 107744, pp. *32-33.) At a minimum, the alleged policy of making default a condition of being considered for a loan modification informs our application of the Biakanja factors (see Ko v. Bank of America, N.A. (C.D. Cal. Oct. 19, 2015, No. SACV 15-00770-CJC (DFMx)) 2015 U.S. Dist. Lexis 142040, pp. *28-99 (Ko)), to which we now turn.

 With respect to the first factor, the loan modification transaction was plainly intended to affect Rossetta. CitiMortgage's decision on her application for a modification plan would likely determine whether or not Rossetta could keep her house. (Alvarez, supra, 228 Cal.App.4th at p. 948, 176 Cal.Rptr.3d 304; Daniels, supra, 246 Cal.App.4th at p. 1182, 201 Cal.Rptr.3d 390.) We conclude the first Biakanja factor weighs in favor of finding a duty of care.

The Biakanja factors

1. (1) Transaction Intended to Affect the Plaintiffs
2. (2) Foreseeability
3. (3) Degree of Certainty That Plaintiff Suffered Injury
4. (4) Connection Between Defendants’ Conduct and Alleged Injury
5. (5) Moral Blame
6. (6) Policy of Preventing Future Harm

the injunctive remedy available under the HBOR for violations of section 2924.17 (§§ 2924.12, 2924.19)

2924.12.(a)
(1) If a trustee’s deed upon sale has not been recorded, a borrower may bring an action for injunctive relief to enjoin a material violation of Section 2923.55, 2923.6, 2923.7, 2924.9, 2924.10, 2924.11, or 2924.17.
(2) Any injunction shall remain in place and any trustee’s sale shall be enjoined until the court determines that the mortgage servicer, mortgagee, trustee, beneficiary, or authorized agent has corrected and remedied the violation

Defendants have been unwilling to voluntarily cooperate with plaintiffs’ requests made in this motion and his Appeal to denial of MODIFICATIONS and DEFERRAL and in his REQUEST for INFORMATION & CLARIFICATION.

Plaintiff has shown his entitlement to preliminary injunctive relief, as explained in this Motion and the supporting documents on file with it.

Therefore, plaintiff asks the Court to restrain defendants as requested in the ORDER.

ORDER:

1. Restrain defendants [Defendant 1] and [Defendant 2], their agents, employees, and any other entities under their control, from conducting a NOTICE OF DEFAULT, NOTICE OF SALE and TRUSTEE’S SALE of the plaintiff’s home, or otherwise attempting to dispossess the plaintiff of the property identified in the Motion for Temporary Restraining Order and Preliminary Injunction.

2. Ordering defendants to show cause as soon as is practicable why the restrain should not persist through the duration of this action

3. Defendants must take out a 6+ inch column AD, for 3 days, in the local Marin Independent Journal newspaper within 20 days of this order and in it declare:-

"As of <ORDER Date> we, <Servicer name> and <Lender name>
have done nothing to help a Borrower stay in his home"

 ( font size must be uniform and text must fill the AD)

Should the AD not appear as required within 20 days the court will impose a fine on defendants of $250,000 to be paid to a Charity for the Homeless (name provided at trial)

4. Reimbursement of Borrower's fees and expenses

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Last modified: Thursday February 22, 2024.