May newsletter explains tort liability for bad servicing and improper loan modification practices
The May newsletter features an article on tort liability for bad servicing and improper loan modification practices. It also includes summaries of recentHBOR and foreclosure-related case law, new HUD guidance on non-borrowing spouses with reverse mortgage, and information on a free foreclosure PLI training on July 14. Find more info about quick loans on this website.
May 2015 Newsletter
|In this issue—
Article on tort liability for bad servicing and improper loan modification practices
Summaries of important new cases, including Miles, Granadino, and more
New HUD guidance on non-borrowing spouses with reverse mortgage
Free foreclosure PLI training on July 14
Tort Liability for Bad Servicing and Improper Loan Modification Practices
While many California attorneys are focused on enforcing borrower’s rights under the Homeowner’s Bill of Rights (HBOR) or the Real Estate Settlement Procedures Act (RESPA) loss mitigation rules, state common law claims may be overlooked. When servicers act unreasonably in handling a loan modification review – either by imposing unreasonable delays through Empower Federal Credit Union: see their office in Syracuse, requesting documents repetitively or piecemeal with no good reason, or scheduling a foreclosure sale while a modification is under active review – this conduct may give rise to common law tort claims in addition to raising issues under HBOR and RESPA. Or, when one of the statutory requirements for a claim under HBOR or RESPA is not met, claims for negligence, fraud, or negligent misrepresentation may provide a helpful proxy to raise the issues and leverage a positive resolution for your client.
This article will provide an overview of the common law tort claims of negligence, fraud, negligent misrepresentation, intentional infliction of emotional distress, and unjust enrichment, and recent California case law on each of these causes of action in the context of foreclosures and mortgage servicing.
Negligence often seems like the most applicable common law claim for bad servicing and loss mitigation conduct. Most advocates are aware of the long-touted proposition that the lender-borrower relationship is an arms’ length relationship with no elevated duty of care (much less any fiduciary duty). Because of this widely accepted principal, it’s best not to make arguments based on the existence of a fiduciary duty (unless you have very special facts – which will be rare). But recently, more and more California courts have taken the position that a bank or lender may owe the borrower a duty not to act negligently in handling a loan mod application once it has undertaken to review the application. The premise is that once the bank agrees to review the application, it must review the application up to a reasonable standard of care.
Nymark v. Heart Federal Savings & Loan Association articulated the general rule that “a financial institution owes no duty of care to a borrower when the institution’s involvement in the loan transaction does not exceed the scope of its conventional role as a mere lender of money.” The Nymark court when on to state that negligence liability could arise where a lender “‘actively participates’ in the financed enterprise ‘beyond the domain of the usual money lender.’” Under the facts in Nymark, where the borrower complained of a lender using an inaccurate appraisal, the court found that the lender had obtained the appraisal for its own purposes to ensure adequate security for the debt, and had not used the appraisal to “induce plaintiff to enter into the loan transaction or to assure him that his collateral was sound.” Therefore, the lender had not gone beyond its traditional role as a mere lender of money. Although the lender had not gone exceeded its traditional role, the court still went on to evaluate whether a duty of care might exist based on the six factors identified in Biakanja v. Irving, 49 Cal.2d 647, 650 (1958). These factors will be discussed below.
Of course, lenders have tried to use Nymark’s “general rule” language to imply an across-the-board ban on negligence claims arising out of mortgage lending or servicing. But California courts have squarely rejected such arguments. Instead, a proper reading of Nymark shows that it allows for the existence of a duty of care, and hence a negligence claim based on the breach of that duty, in either of two scenarios: (1) the lender’s activities went beyond the traditional role of a mere lender of money, such as by exerting undue pressure on a borrower to enter into a loan or being actively involved in the financial enterprise at issue or (2) even where the lender’s activities are “confined to their traditional scope,” a duty may exist depending on a case-by-case analysis of the six factors identified in Biankanja v. Irving.
The six factors courts must analyze in determining whether a lender or servicer owes the borrower a duty of care are as follows:
(1) the extent to which the transaction was intended to affect the plaintiff, (2) the foreseeability of harm to him, (3) the degree of certainty that the plaintiff suffered injury, (4) the closeness of the connection between the defendant’s conduct and the injury suffered, (5) the moral blame attached to the defendant’s conduct, and (6) the policy of preventing future harm.
Courts that rule against the borrower on a negligence claim tend to emphasize their conclusion that a loan modification, “which at its core is an attempt by a money lender to salvage a troubled loan, is nothing more than a renegotiation in terms,” is a traditional money lending activity. The court in Ansanelli disagreed, concluding that the “defendant went beyond its role as a silent lender and loan servicer to offer an opportunity to plaintiffs for loan modification and to engage with them concerning the trial period plan,” and that this was “beyond the domain of a usual money lender.” Still, it is better not to get bogged down with this issue, and instead to focus on the six factors – which, as explained above, the court should apply even when it concludes that the lender was exercising a core money lending function.
A number of courts applying these six factors to wrongful conduct in the review of a loan modification application have found them to weigh solidly in favor of the existence of a duty of care. For example, In Garcia v. Ocwen Loan Servicing, LLC, Ocwen had received documents from the homeowner in support of his loan modification application but routed them to the wrong department, provided a phone number that went automatically to a recorded message rather than allowing the homeowner to speak with any of its employees, and sold the home at a trustee’s sale while the modification was still under review and without notice to the homeowner. The court found that at least five out of the six Nymark factors weighed in favor of finding a duty of care. The transaction was “unquestionably intended to affect [the] Plaintiff,” as it “would determine whether or not he could keep his home.” The potential harm to the plaintiff – loss of an opportunity to save his home – was readily foreseeable. In this regard, the court observed, “Although there was no guarantee that the modification would be granted had the loan been properly processed, the mishandling of the documents deprived Plaintiff of the possibility of obtaining the requested relief.” The injury to the Plaintiff was certain, in that he lost the opportunity to obtain a loan modification and in the process, his home was sold. The court found a close connection between the defendant’s conduct and the injury actually suffered, reasoning that, “to the extent Plaintiff otherwise qualified and would have been granted a modification, Defendant’s conduct in misdirecting the papers submitted by Plaintiff directly precluded the loan modification application from being timely processed.” The court noted that recent actions by the state of California and the federal government (through creating the HAMP program) demonstrated a public policy of preventing future harm to homeowners. The court declined to decide at this stage of the proceedings whether moral blame attached to the defendant’s conduct, but found that five out of six factors in favor of a duty of care was sufficient to easily tip the scales.
Other courts have analyzed the Biakanja factors and found servicers to owe a duty of care in the loan modification process. In Alvarez v. BAC Home Loans Servicing, LP, the complaint alleged that BAC Home Loans had failed to review the plaintiffs’ loan mod application in a timely manner, foreclosed while a loan modification review was still in process, and mishandled plaintiffs’ applications by relying on incorrect information, such as the wrong figure for monthly income and a false allegation that the second lien holder prevented modification of the loan. In examining the question of whether the defendants’ conduct was blameworthy (the fifth factor), the court found it “highly relevant” that the borrower’s ability to protect his interests in the loan modification process is “practically nil” and the bank “holds all the cards.” Citing a strong brief from consumer advocates that described the flaws in the modern mortgage servicing system, the court concluded, “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.”
However, plenty of California trial courts have arrived at the opposite conclusion, finding no duty of care in the loan mod process. These courts often seem to get hung up on the fourth factor, the close connection between the servicer’s conduct and the borrower’s injury. As the Lueras court argued, “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.” The court further argued regarding the fifth factor that “[i]f 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.” These arguments fundamentally misunderstand the nature and purpose of loss mitigation. Even when a homeowner is in default on the loan because of financial hardship unrelated to the lender’s conduct, the lender’s failure to properly review a loan mod application may be closely connected to the harm of loss of the home if the lender’s failure to review the application properly directly resulted in foreclosure. In heading off these kinds of arguments, it is helpful to plead (whenever possible) that the borrower was in fact qualified for a loan modification under controlling rules, and that but for the lender’s mishandling of the application, the loan mod would have been approved and foreclosure avoided. However, the Alvarez and Garcia courts went even further than this, recognizing that even where there was no guarantee a loan modification would have been approved if processed correctly, the servicer’s conduct “deprived Plaintiff of the possibility of obtaining the requested relief.” Still, in analyzing the close connection factor, the Garcia court also noted that “to the extent Plaintiff otherwise qualified and would have been granted a modification,” the defendant’s conduct had directly prevented the mod from being approved. Therefore, it never hurts to plead eligibility for the modification the plaintiff was seeking.
Although there has been a split of authority from the California Court of Appeals regarding the existence of a duty of care in the handling of loan mod applications, the tide is beginning to turn in favor of homeowners. As one court recently noted, the negative ruling from the Court of Appeals in Lueras v. BAC Home Loans Servicing (2013) relied heavily on the appellate decision in Aspiras v. Wells Fargo Bank, N.A., 219 Cal. App. 4th 948 (2013), which the California Supereme Court recently decertified for publication. The more recent decision in Alvarez, entered August 7, 2014, represents the most “relevant, recent, and well-reasoned decision on the question.”
The cases where borrowers have been successful on a negligence theory have generally not been based on a theory that the lender was required to approve a loan modification, but rather that the lender had a duty not to mishandle the application. Courts have generally agreed that there is no common law duty to provide a loan modification.
Some of the bad trial court decisions seem to stem from insufficient factual allegations – complaints that rest on generic or conclusory statements of lender failing to “properly service the loan” or to handle the loan “in such a way to prevent foreclosure,” rather than clearly pleading the specific conduct that deprived the plaintiff of the opportunity to be approved for a loan modification for which she was qualified. Other decisions seem to reflect good pleading and simply bad reasoning by the court.
In order to increase the odds of a positive ruling on a negligence claim related to poor servicing, it is important to plead specific facts showing that the lender’s conduct was directly related to the failure to approve your client for a loan modification, that your client in fact qualified for a loan modification under the applicable rules (HAMP, Fannie Mae, Freddie Mac, FHA, etc), and that but for the servicer’s wrongful conduct, your client would have been approved for a modification and would have avoided foreclosure.
It may be worth pleading, in addition or in the alternative, negligence based on the lender’s breach of a duty that comes from RESPA. Such duties would include the duty to exercise reasonable diligence to obtain a complete application, the duty to review a complete application within thirty days, or the duty not to initiate foreclosure when a complete application has been received and is still under review.
Even the Lueras court, which fiercely rejected a homeowner’s negligence claim, recognized that lenders do owe borrowers a duty 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.” The court noted that it was completely foreseeable that a borrower might be harmed by “an inaccurate or untimely communication about a foreclosure sale or about the status of a loan modification” and the connection between such a misrepresentation and the harm suffered would be “very close.” The Lueras court explicitly acknowledged the viability of a claim for negligent misrepresentation based on facts such as these. We now turn our attention to these kinds of claims, those based on negligent or fraudulent misrepresentations of fact.
Fraud and Negligent Misrepresentation
Claims for fraud or negligent misrepresentation hinge on a material misrepresentation of fact that causes harm to the plaintiff. In the loss mitigation context, this could include a misrepresentation that a foreclosure sale has been canceled, that a loan modification application has been deemed complete and is under active review, or that a borrower is qualified for a loan modification and should refrain from taking other steps to cure the default and avoid foreclosure. It makes sense to discuss these two claims together, since the key difference between them is the defendant’s knowledge of falsity and intent to deceive the plaintiff as additional required elements for a fraud claim. It may be a good idea to plead negligent misrepresentation in the alternative whenever raising a fraud claim. After all, even when there is circumstantial evidence of a lender’s bad intent, proving intent can be difficult.
Under California law, the elements of a claim for negligent misrepresentation are:
(1) a misrepresentation of a past or existing material fact, (2) without reasonable grounds for believing it to be true, (3) with intent to induce the plaintiff’s reliance, (4) ignorance of the truth and justifiable reliance by the plaintiff, and (5) damages.
The elements of a claim for fraud are:
(1) the defendant made a false representation as to a past or existing material fact; (2) the defendant knew the representation was false at the time it was made; (3) in making the representation, the defendant intended to deceive the plaintiff; (4) the plaintiff justifiably and reasonably relied on the representation; and (5) the plaintiff suffered resulting damages.
One key detail regarding these claims is that the misrepresentation generally cannot concern a promise to do something in the future; the defendant must have misrepresented a past or existing material fact. At least one court has held that a servicer’s misrepresentations that it would “continue working for a loan modification that would be approved, which would allow Plaintiff to keep and save his home” and other promises related to the terms of the modification which would be approved in the future could not support a claim for negligent misrepresentation.
However, another court reversed a grant of summary judgment to the lender on fraud and negligent misrepresentation claims based on a servicer’s representations that the borrower “should not make the April 2008 loan payment because ‘the worst thing that’s going to happen is you are going to have a late fee, we will get this done for you’; and [ ] her loan modification request likely would be approved because she was prequalified.” These statements seem awfully close to promises regarding future performance, but the court found them sufficient, focusing primarily on the statement that plaintiff should not make the April 2008 payment. This caused her to fall behind on the loan and incur late fees, and she testified that she could have caught up the missed payments prior to the foreclosure date – just not these additional fees.
The complaint also must provide factual support for the assertion that statements at issue were misrepresentations of fact, rather than merely concluding that the representations were false.
Another difficult element of these claims is showing that the plaintiff justifiably relied on the misrepresentations. Justifiable reliance may be refuted if the lender can point to evidence that should have aroused suspicion or disbelief in the plaintiff regarding the accuracy of the misrepresentations. For example, one court found a lack of justifiable reliance on statements that her loan was “in underwriting” and “under review” and thus a foreclosure would not proceed where the complaint also contained allegations that the application had been denied prior to foreclosure, the file was closed, and the plaintiff had “actual knowledge” of the scheduled foreclosure sale. The court found that these alleged facts rendered it unjustifiable for plaintiff to forego taking the actions “she deemed necessary to avoid the foreclosure sale” because the plaintiff “was on notice of problems to frustrate the notion of her justifiable reliance.” 
Finally, another challenge to these types of claims is the heightened pleading standard of Federal Rule of Civil Procedure 9(b). Recall that these claims must be pled with particularity, not just plausibility. One example of this is that in a fraud claim against a corporation, a plaintiff must “allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written.”
Intentional (or Negligent) Infliction of Emotional Distress
A claim for intentional infliction of emotional distress (IIED) can be difficult to plead, as it requires some pretty extreme facts. The elements of the tort of intentional infliction of emotional distress are:
(1) [E]xtreme and outrageous conduct by the defendant with the intention of causing, or reckless disregard of the probability of causing, emotional distress; (2) the plaintiff’s suffering severe or extreme emotional distress; and (3) actual and proximate causation of the emotional distress by the defendant’s outrageous conduct. Conduct to be outrageous must be so extreme as to exceed all bounds of that usually tolerated in a civilized community.
A number of California courts have held that the act of foreclosing on a home (absent other circumstances) is not the kind of extreme conduct that supports an intentional infliction of emotional distress claim. Without other aggravating circumstances showing outrageousness, an intentional infliction of emotional distress claim will fail. Denial of a loan modification alone is not likely sufficient.
However, the court in Ragland found that an intentional, unlawful foreclosure could be outrageous enough to sustain a claim for IIED. The court likened an unlawful foreclosure to the deliberate, unlawful eviction that supported a claim for IIED in Spinks v. Equity Residential Briarwood Apartments, 171 Cal. App. 4th 1004, 1045 (2009). In the Spinks case, the court noted that even without threats, violence, or abusive language, a deliberate and intentional eviction without legal justification was outrageous. The Ragland court reasoned that whether the defendant had the right to foreclose was the issue at the heart of the case, and the plaintiff had created a triable issue of fact on that point. If the foreclosure was not justified, the court reasoned that the lender’s conduct was at least as bad as the conduct in Spinks and therefore exceeded the bounds of decency.
The court in Davenport v. Litton Loan Servicing also opened the door to the possibility of an IIED claim arising out of a bad faith foreclosure. The court explained, “Common sense dictates that home foreclosure is a terrible event and likely to be fraught with unique emotions and angst. Where a lending party in good faith asserts its right to foreclose according to contract, however, its conduct falls shy of ‘outrageous,’ however wrenching the effects on the borrower.” The court went on to consider whether the borrower had shown bad faith in the foreclosure process, so as to support a claim for IIED. The court determined that plaintiff had not pled sufficient facts linking the lender’s conduct to her emotional distress, but dismissed the claim with leave to amend in case further facts could be pled.
The second IIED element requires intentional or reckless conduct. Failing to plead any specific facts relating to defendants’ mental state may lead to dismissal of a claim for IIED.
California does recognize a claim for negligent infliction of emotional distress, but a plaintiff cannot recover emotional distress damages caused by injury to property unless there is intentional conduct or a preexisting relationship between the parties creating a special duty of care. In Ragland, the court dismissed plaintiff’s claim for negligent infliction of emotional distress because she had suffered only injury to her property and she could not prove a relationship with the lender giving rise to a duty of care.
California courts diverge on whether unjust enrichment can function as an independent claim for relief or “is instead an effect that must be tethered to a distinct legal theory to warrant relief.” Some courts have read a plaintiff’s “claim” for unjust enrichment as a claim for relief; other courts view it merely as an “effect” of some other wrongful conduct. The theory behind unjust enrichment is that based on equity and justice, a person who has been unjustly enriched at the expense of another should be required to make restitution. The general elements of an unjust enrichment claim are: (1) a benefit conferred on the defendant by the plaintiff; (2) an appreciation or knowledge by the defendant of the benefit; and (3) the acceptance or retention by the defendant of the benefit under such circumstances as to make it inequitable for the defendant to retain the benefit without making restitution. A claim for unjust enrichment, to the extent it is viable in California, might be premised on conduct by a servicer such as retaining funds from the borrower for force-placed insurance when it was not entitled to impose force-place insurance.
In sum, advocates should consider alleging claims for common law torts such as negligence, fraud, negligent misrepresentation, and intentional infliction of emotional distress whenever the facts of your case support such claims. These can be a helpful addition to the statutory claims your client may have under HBOR or RESPA, or a common law alternative when statutory claims are not available.
Summaries of Recent Cases
Published California Cases
Breach of Contract; Damages for Wrongful Foreclosure Claim Includes all Proximately Caused Damages; Pleading Standard for Fraud Claims
Miles v. Deutsche Bank Nat’l Tr. Co., __ Cal. App. 4th __, 2015 WL 1929732 (Apr. 29, 2015): A breach of contract claim requires a contract, plaintiff’s performance or excuse for failure to perform, breach by defendant, and resulting damage to plaintiff. Miles alleged that he contracted with Deutsche Bank to refinance his loan. He made payments under the agreement and alleged that the bank breached that contract by repudiating it and refusing to accept payments. And he alleged he was damaged by having to pay fees and by having been subjected to an eviction. Deutsche Bank advanced several technical arguments in defense of the lower court decision, including a claimed failure to attach or plead the verbatim contract terms, or to specify the form of the contract, that were rejected. The court reversed the trial court’s dismissal of plaintiff’s breach of contract claim.
The trial court granted summary judgment to Wells Fargo against Miles’s wrongful foreclosure claim on the sole basis that there were no damages to Miles as his home was underwater and therefore had no lost equity. Reviewing the existing wrongful foreclosure case law, the court noted that the cause of action was a tort, not contract – and as such, damages were not so limited. The court noted that a wrongful foreclosure may cause damages and listed moving expenses, lost rental income, damage to credit, and emotional distress as types of damages recoverable through a tort for wrongful foreclosure. The court reversed the grant of summary judgment on the claim of wrongful foreclosure.
Fraud claims demand specific pleading of: 1) a misrepresentation; 2) defendant’s knowledge that the misrepresentation is false; 3) defendant’s intent to induce borrower’s reliance; 4) the borrower’s justifiable reliance; and 5) damages. After falling behind on his mortgage payments, Miles applied for and was granted a loan modification with servicer HomEq. Miles continued to make payments under that agreement even as HomEq declared it would no longer honor it and sent him revised documentation inexplicably increasing his loan balance. HomEq eventually refused to accept Miles’s payments and, when Miles insisted on the terms of the agreement, the servicer declared him in default and recorded a notice of trustee’s sale of the property. The bank argued that Miles failed to plead fraud with sufficient specificity. Reversing the trial court decision against Miles, the court noted that any missing names and phone numbers were the sort of information more to be reasonably in the possession of defendants; “in an era of electronic signing, it is often unrealistic to expect plaintiffs to know the who-and-the-what authority when mortgage servicers themselves may not actually know the who-and-the-what authority.” The court reversed the dismissal of Miles’s claim for fraud and negligent misrepresentation causes of action.
Promissory Estoppel; Statute of Frauds
Granadino v. Wells Fargo Bank, N.A., __ Cal. App. 4th __, 2015 WL 1929455 (Apr. 14, 2015): To state a claim for promissory estoppel, a borrower must show that the servicer promised a benefit, did not perform on that promise, and that the borrower detrimentally relied on that promise. A Wells Fargo representative told the Granadinos’ law firm that no trustee sale was scheduled because they were being reviewed for a modification. Instead, shortly thereafter, Wells Fargo gave notice that the foreclosure process would proceed and the property was sold. The court upheld the trial court’s grant of Wells Fargo’s motion for summary judgment. The factual statement by the servicer’s representative, even if incorrect, did not amount to a promise that Wells Fargo would refrain from completing a trustee sale in the future. The record also did not support a conclusion that the borrowers had relied on the statement by Wells Fargo to their detriment because Wells Fargo told the borrowers that the foreclosure sale would go forward. Because the property had negative equity, the borrowers also failed to establish damages. The court questioned whether their damaged credit was due to missed mortgage payments or other factors, rather than the foreclosure.
The court also applied the statute of frauds to reject the promissory estoppel claim because the borrowers “presented no argument” to support an estoppel exception to the application of the statute of frauds. Finally, the court rejected Granadinos’ third request for continuance and a request to amend the complaint. The mere statement that case law on mortgage modification had evolved dramatically since the complaint had been filed was deemed insufficient.
Borrower Does Not Need to Reaffirm Loan to Qualify for Loan Modification; Definition of “Borrower” under HBOR; Dual Tracking Claim Fails Without Documentation of Material Change of Financial Circumstances; SPOC Claim May Proceed Independently of Dual Tracking Claim
McLaughlin v. Aurora Loan Services, 2015 WL 1926268 (C.D. Cal. Apr. 28, 2015): HBOR prohibits a servicer from moving forward with the foreclosure process, once a borrower has submitted a complete loan modification application. Damages are available only after a trustee’s deed upon sale has been recorded. McLaughlin submitted multiple loan modifications to Nationstar. The modification was denied, and McLaughlin submitted a letter within the required appeal period. After requesting further information from McLaughlin, Nationstar recorded a Notice of Trustee Sale on the property. The trustee’s deed upon sale was subsquently rescinded, approximately six months later. Nationstar argued that McLauglin is not a “borrower” under HBOR section 2924.12(b), due to the rescission of the deed and McLaughlin’s discharge of personal liability of loan in bankruptcy. The court held that rescission of the trustee’s deed does not extinguish McLaughlin’s HBOR claims that existed prior to rescission, although it may limit damages to the period between the date of recording of the trustee’s deed to the date of rescission. The court also rejected Nationstar’s argument that McLaughlin was not a “borrower” if he did not reaffirm his loan that was discharged in bankruptcy. To accept the argument, the court reasoned, would add an exception to the statutory definition of “borrower” where one does not exist. What’s more, there is no requirement to reaffirm for a borrower to seek a loan modification on a discharged loan. Nationstar’s motion for summary judgment on the basis that McLaughlin was not a “borrower” was denied.
HBOR’s dual tracking protections do not apply to borrowers who submit multiple applications, unless the borrower experienced a material change in financial circumstances and documented and submitted that change to their servicer. McLaughlin’s third loan modification application asserted an increase in income, without identifying its source. After the denial of her application, McLaughlin submitted a letter within the required appeal period. Her letter identified a new source of increased income, but it provided no supporting documents. The court observed that (1) the new future income did not constitute a basis for challenging Nationstar’s prior denial of her application, and (2) unsupported assertions are insufficient to constitute evidence of a material change in circumstances. Nationstar’s motion for summary judgment on the dual tracking claim was granted.
Borrowers who request a foreclosure prevention alternative are to be provided with a single point of contact (SPOC) by a servicer, including a “direct means” of communicating with that SPOC. Nationstar argued without supporting authority that the dismissal of McLaughlin’s dual tracking claim was fatal to her SPOC claim. The court noted multiple cases in which a SPOC claim survived dismissal of a dual tracking claim. Nationstar’s motion for summary judgment on the SPOC claim was denied.
Dual Tracking: “Complete” Application and Material Change in Financial Circumstances; Inability to Communicate with SPOC Resulting in Loss of Modification Can Constitute Material Violation
Mackensen v. Nationstar Mortg., 2015 WL 1938729 (N.D. Cal. Apr. 28, 2015): Servicers may not move forward with foreclosure while a borrower’s complete first lien loan modification application is pending. This dual tracking restriction also applies to a borrower’s subsequent modification applications, if borrower “documented” and “submitted” a material change in their financial circumstances to their servicer. CC 2923.6(g). Here, the complaint alleged that the borrower’s monthly income increased over $2,000 per month and he “documented [this] in his loan modification.” The allegation is sufficient to show documentation of a material change in circumstances. Nationstar also argued that the loan modification application was not complete. The court disagreed. Plaintiff alleges both that he “submit all required documents requested by Nationstar,” and that he timely submitted appeals of the denials of his loan modification applications; nonetheless, a notice of trustee sale was recorded prior to a decision on his appeals. These allegations are sufficient to show that the application was complete before the sale. The court denied the servicer’s MTD borrower’s dual tracking claim.
HBOR requires servicers to provide borrowers with a single point of contact, or “SPOC,” during the loan modification process. SPOCs may be an individual or a “team” of people and have several responsibilities, including: facilitating the loan modification process and document collection, possessing current information on the borrower’s loan and application, and having the authority to take action, like stopping a sale. Here, the borrower was unable to contact either of his two assigned SPOCs to confirm the inclusion of a balloon payment in the proposed loan modification despite repeated calls. This was sufficient to state a SPOC claim because even though the law does not require a single SPOC, neither SPOC was able to perform inform the borrower of his current status required by CC 2923.7. The court also rejected Nationstar’s argument that the violation was not material when the complaint alleged that Nationstar’s violation resulted in his inability to accept the loan modification offer. The court denied Nationstar’s MTD borrower’s SPOC claim.
Borrower who Qualifies for HAMP can Enforce HAMP TPP; Duty of Care for Loan Servicer; Fraud; UCL
Meixner v. Wells Fargo Bank, N.A., __ F. Supp. 3d __, 2015 WL 1893514 (E.D. Cal. Apr. 24, 2015): A breach of contract claim requires a contract, plaintiff’s performance or excuse for failure to perform, breach by defendant, and resulting damage to plaintiff. Meixner had been sent a TPP by Wells Fargo that provided that if he complied with the terms of the agreement and qualified for HAMP, the bank would provide a permanent loan modification agreement. Meixner alleged that the HAMP TPP was a contract between Wells Fargo himself conditioned on his making the required payments, which he did. The bank countered that the TPP was not a contract, pointing to conditional language in the offer letter, and argued that Meixner failed to allege that he qualified for HAMP. But case law does not recognize conditional language as limiting the contractual effect of a TPP. And Meixner alleged multiple specific errors made by Wells Fargo in concluding he was ineligible for HAMP. The court denied the bank’s motion to dismiss the breach of contract claim.
To state a claim for promissory estoppel, borrowers must show that a servicer promised a benefit and went back on that promise, and that the borrower detrimentally relied on that promise. In cases involving a written TPP agreement, TPP payments themselves can demonstrate reliance and injury. Meixner was made an offer of a TPP, he made the three payments required under the TPP, and he alleged multiple specific errors made by Wells Fargo in concluding he was ineligible for HAMP. Wells Fargo countered that the promise to Meixner was conditional, but the court noted that case law does not support that position. The bank’s motion to dismiss the promissory estoppel claim was denied.
The elements of a claim for negligence include: (1) the existence of a duty to exercise due care; (2) breach of that duty; (3) causation; and (4) damages. Meixner alleged that Wells Fargo mishandled his loan modification application. The bank responded that it had no duty to exercise due care in its relationship with Meixner. In holding that a duty of care existed, the court found the Alvarez decision persuasive; once parties entered into a home loan, the 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.” The court denied Wells Fargo’s motion to dismiss Meixner’s negligence claim.
Intentional misrepresentation claims demand specific pleading of: 1) a misrepresentation; 2) defendant’s knowledge that the misrepresentation is false; 3) defendant’s intent to induce borrower’s reliance; 4) the borrower’s justifiable reliance; and 5) damages. In a claim for negligent misrepresentation, the plaintiff need not allege the defendant made an intentionally false statement, but simply one as to which he or she lacked any reasonable ground for believing the statement to be true. Meixner entered into a TPP with Wells Fargo and timely made all agreed payments. He was repeatedly told his loan modification was about to be finalized, and also advised to miss payments in order to qualify for HAMP. Meixner alleged that the statements by Wells Fargo’s agents were made either with knowledge of their falsity or without any reasonable basis for believing them to be true. Meixner alleged that he justifiably relied on these statements, because their falsity was not readily ascertainable. And he alleged damages in fees, costs and negative credit impacts, as well as the lengthy process itself. The court ruled that Meixner had met his pleading burden, and denied Wells Fargo’s motion to dismiss the negligent and intentional misrepresentation claims.
The elements of a claim for wrongful foreclosure include (1) that the trustee or mortgagee caused an illegal, fraudulent, or willfully oppressive sale of real property pursuant to a power of sale in a mortgage or deed of trust; (2) prejudice or harm to the party attacking the sale; and (3) where the trustor or mortgagor challenges the sale, that party must have tendered or be excused from tendering the amount of the debt. Meixner brought a claim for wrongful foreclosure, alleging that a break in the chain of title occurred and that HSBC Bank was not the rightful owner of his loan when it caused the his property to be sold at a non-judicial foreclosure sale. Citing the weight of authority against allowing homeowners to make such a claim, the court nevertheless deferred judgment on this element of Meixner’s suit pending the California Supreme Court’s decision in Yvanova v. New Century Mortgage Corp., 331 P.3d 1275 (Cal. 2014).
The court found that because Meixner had adequately pled intentional and negligent misrepresentation, and because those claims are unlawful, unfair, and fraudulent, Meixner also had a claim under the UCL. Wells Fargo’s motion to dismiss the UCL claim was denied by the court.
Delinquent Borrower may Sue under ECOA’s 30-Day Notice Requirement; SPOC; Duty of Care for Loan Servicers
MacDonald v. Wells Fargo Bank, N.A., 2015 WL 1886000 (N.D. Cal. Apr. 24, 2015): The Equal Credit Opportunity Act (ECOA) requires lenders to provide credit applicants with a determination within 30 days of receiving applicant’s request. The lender must also explain reasons for any adverse actions against the applicant. This second requirement only applies if applicant is not delinquent or in default. Here, borrowers claimed the servicer failed to provide them with a written determination within 30 days of her request. They did not plead anything related to the adverse action part of the statute. They therefore did not have to demonstrate that they was not delinquent or in default. The 30-day violation claim survived servicer’s MTD.
A borrower who requests a foreclosure prevention alternative is to be provided with a single point of contact (SPOC) by the servicer, including a “direct means of communication” with that SPOC. The MacDonalds were assigned a SPOC and were working on a loan modification application when they received notice from Wells Fargo that their application was closed on the grounds that they had filed for bankruptcy (which they in fact had not). They were assigned a new SPOC along with a case number that belong to a different person. After informing the bank of its mistake and being instructed to submit a new application, the MacDonalds were unable to again make contact with their SPOC. Wells Fargo filed a motion to dismiss asserting that the changing of SPOCs is not prohibited. The bank further alleged that a complaint that the SPOC did not “speak” with borrowers did not foreclose the possibility of other forms of communication with the MacDonalds. The court rejected both claims: the MacDonalds did not allege a violation based on the transfer to a new SPOC, nor did their complaint solely rest on a refusal to “speak” with them. Instead, the borrowers also alleged that their SPOC failed to contact them and failed to communicate the current status of loan modification application, duties required by CC 2923.7. Wells Fargo’s motion to dismiss was denied by the court.
A servicer is not obligated to initiate the modification process or to offer a modification, but once it agrees to engage in the process with a borrower a servicer owes a duty of care not to mishandle the application or negligently conduct the modification process. Wells Fargo moved to dismiss on the ground that no such duty of care exists. The court explained that Lueras v. BAC Home Loans Servicing, L.P., 221 Cal. App. 4th 49 (2013) and every other case cited by the bank predated Alvarez v. BAC Home Loans Servicing, L.P., 228 Cal. App. 4th 941 (2014), which marked “a sea change of jurisprudence on this issue.” The court also noted that “Wells Fargo does not direct the Court to a single decision in which a court weighed both the Lueras and Alvarez decisions and decided to follow Lueras.” The court denied the servicer’s motion to dismiss the borrower’s negligence claim.
Limitations on Successive Rule 12(b)(6) Motions
Hild v. Bank of Am., N.A., 2015 WL 1813571 (C.D. Cal. Apr. 21, 2015): Federal Rule of Civil Procedure 12(g) limits a defendant’s ability to bring successive motions to dismiss. If the defendant fails to assert an argument in a 12(b)(6) motion to in the initial complaint, the argument is waived and may not be raised in a second motion to dismiss. Here, the defendant’s first motion to dismiss “argued that it owed no duty to Plaintiffs but did not assert any insufficiency of Plaintiffs’ allegations with regard to Nationstar’s breach of that duty and Plaintiff’s resulting damages.” Nationstar then tried to raise these additional arguments in the motion to dismiss the Second Amended Complaint. Because Nationstar failed to raise the arguments in the first 12(b)(6) motion, the argument is waived and may not be raised in a subsequent 12(b)(6) motion under Rule 12(g).
No Specific Request Required for SPOC Claim when Servicer Said One Would be Provided; Failure to Provide Reason for Denial Constitutes Material Violation
Hendricks v. Wells Fargo Bank, N.A., 2015 WL 1644028 (C.D. Cal. Apr. 14, 2015): HBOR requires servicers to provide a single point of contact (SPOC) “[u]pon request from a borrower who requests a foreclosure prevention alternative.” CC § 2923.7(a). SPOCs may be an individual or a “team” of people and have several responsibilities, including informing borrowers of the status of their applications and helping them apply for all available loss mitigation options. Here, the borrower alleged her servicer violated these requirements when he was trying to obtain information about his loan modification but was given “multiple and divergent instructions.” The servicer also never provided him with a reason for the loan modification denial and information on how to appeal, all arising from failure to provide a SPOC.
The court first rejected Wells Fargo’s argument that the claim fails because the borrower did not allege he specifically requested a SPOC. Although the court agreed that a specific request was necessary, it was sufficient that the borrower alleged that a Wells Fargo representative told him a SPOC would be provided. Wells Fargo also argued that the SPOC violation was not material. The court disagreed. Having accepted Plaintiff’s loan modification – whether a second application or not – Wells Fargo was obliged to abide by California law governing servicing of home loans and not cause harm to the borrowers whose loans it services. If Wells Fargo had provided a SPOC, the borrower would have received “clear, non-contradictory answers to his inquiries regarding his modification, including the basis for his denial allowing him to appeal.” The court denied Wells Fargo’s motion to dismiss the SPOC claim.
Dual Tracking: “Complete Application” and Denial Letter; Debt Collection under Rosenthal Act
Agbowo v. Nationstar Mortg. LLC., 2015 WL 1737848 (N.D. Cal. Apr. 10, 2015): Servicers may not move forward with foreclosure while a borrower’s complete first lien loan modification application is pending. This dual tracking restriction also applies to a borrower’s subsequent modification applications, if borrower “documented” and “submitted” a material change in their financial circumstances to their servicer. CC 2923.6(g). Here, the borrowers alleged that their loan modification application was complete, and Nationstar’s subsequent requests asked for documents they already submitted. Despite Nationstar’s letter denying the application for incomplete documents, the letter does not establish this fact as true as the court must credit the allegations in the complaint at the pleadings stage. The court also rejected Nationstar’s argument that the letter stating the borrowers could not be consider due to missing documents was not a denial. The letter said that Nationstar is “unable to offer” the borrowers a loan modification and did not say that the application “could not be considered.” The court denied Nationstar’s MTD the dual tracking claim.
While providing its own standards governing debt-collection practices, the RFDCPA also provides, with limited exceptions, that “every debt collector collecting or attempting to collect a consumer debt shall comply with the provisions of” the federal Fair Debt Collection Practices Act. One of these incorporated FDCPA provisions is that which prohibits debt collectors from using “any false, deceptive, or misleading representation or means in connection with the collection of any debt.” Here, the borrowers alleged that Nationstar gave “the false impression to [borrowers] that their mortgage modification request . . . was being processed in good faith,” and as a result of this impression, the borrowers “did not take any further steps to protect” the Property from foreclosure. The complaint made clear that it is Nationstar’s actions with respect to Plaintiffs’ loan modification applications, rather than or in addition to Nationstar’s foreclosure-related actions, that violated the RFDCPA. This was sufficient to allege that Nationstar was engaging in “debt collection.” The court denied Nationstar’s MTD the RFDCPA claim.
Servicer’s Letter Requesting Additional Documents Not Admissible; Dual Tracking; Transferee’s Breach of TPP
Mendonca v. Caliber Home Loans, Inc., 2015 WL 1566847 (C.D. Cal. Apr. 6, 2015): Federal Rule of Civil Procedure 56(e) does not require that all documents be authenticated through personal knowledge when submitted in a summary judgment motion. Yet there is such a requirement “where exhibits are introduced by being attached to an affidavit.” Here, Caliber offered letters requesting additional documentation in support of its argument that the borrower’s application was not complete. The letters, attached to a declaration by a Caliber employee, were not properly authenticated when the declaration does not establish “that he wrote the letters in question, that he signed them, that he used any of the letters . . ., or that he saw others do so.” He only attempts to authenticate the letters by stating that they are part of Caliber’s business records that he reviewed. Without any evidence of personal knowledge regarding the authenticity of the letters, they are not admissible.
Servicers may not move forward with foreclosure while a borrower’s complete first lien loan modification application is pending. Here, Caliber contends that the borrowers did not submit a complete application. The only evidence Caliber supplied in support, however, was correspondence deemed inadmissible by the court. Because Caliber had the burden of proof as the movant, there remain triable issues of fact as to whether the borrowers submitted a complete application. Caliber’s MSJ is denied as to the CC 2923.6 claim.
To succeed on a breach of contract claim, plaintiffs must establish (1) the existence of a contract, (2) plaintiffs’ performance or an excuse for nonperformance, (3) breach by Caliber, and (4) resulting damages to plaintiffs. Here, the borrowers argue that their TPP with Chase binds Caliber as soon as Chase transferred servicing to Caliber. Caliber argued that the borrowers did not comply with the agreement because their payments were late. However, the borrowers submitted evidence that the only reason for the late payments was Caliber’s refusal to acknowledge the TPP agreement. The court found that borrowers complied with the agreement and that triable issues remain as to whether the TPP bound Caliber and whether Caliber breached the agreement. Caliber’s MSJ is denied as to the breach of contract claim.
Servicer’s Duty of Care
Salazar v. U.S. Bank Nat’l Ass’n, 2015 WL 1542908 (C.D. Cal. Apr. 6, 2015): Servicers may not move forward with foreclosure while a borrower’s complete first lien loan modification application is pending. This dual tracking restriction also applies to a borrower’s subsequent modification applications, if borrower “documented” and “submitted” a material change in their financial circumstances to their servicer. CC 2923.6(g). Here, the borrower previously applied for and was denied a loan modification in 2011. The complaint alleged that she documentation of these changed circumstances to Citibank, submitted this updated income information online, and spoke to a Citibank representative about her financial circumstances, the court still held that the complaint failed to show that the change in circumstances was documented and submitted to the servicer. The CC 2923.6 claims (alleged as part of wrongful foreclosure claim) also fails because the complaint only alleged submission of “preliminary information” through Citibank’s web site and not a complete application.
Under CC 2923.7, servicers promptly provide borrowers with a single point of contact (SPOC), including a “direct means” of communicating with that SPOC. Here, Citibank failed to appoint a SPOC until a month after the borrower submitted a loan modification application. The court first rejected Citibank’s argument that the late appointment did not violate the statutory mandate for a prompt SPOC appointment. Citibank also argued that it satisfied the SPOC requirement because the borrowers were able to discuss her loan modification application with several individuals. The court disagreed, pointing to the conflicting information these purported SPOCs told the plaintiff, leading the borrower with no one to talk to. Finally, the court held that the plaintiff pled a sufficiently material SPOC violation because “it is plausible that CMI’s failure to appoint a SPOC prevented her from submitting a complete modification application and sufficient documentation of the material change in her financial circumstances.” Therefore, if a proper SPOC had been provided, the borrower may have avoided foreclosure.
Servicer Fails to Follow Local “Meet and Confer” Rule
Goldberg v. Nationstar Mortg. LLC, No. CV 14-8759 PSG (MANx) (C.D. Cal. Apr. 1, 2015): Local Rule 7-3 in the federal Central District of California requires parties to “meet and confer.” These conferences “shall take place at least seven days prior to the filing of [a] motion,” “preferably in person.” Here, servicer claimed it attempted to “meet and confer” by speaking to Plaintiff’s counsel by telephone. However, the defendant’s declaration failed to demonstrate that counsel “discuss[ed] thoroughly…the substance of the contemplated motion[,]” as required by the rule. Rather, counsel simply “stated to [Plaintiffs’ counsel] that plaintiff’s entire complaint, and all claims for relief therein, fails to state a claim upon which relief can be granted.” The court found the conference does not satisfy Local Rule 7-3’s requirement that counsel thoroughly discuss the substance of the motion. Because strict compliance with the rule is required, the court denied servicer’s MTD.
Recent Regulatory Updates
HUD Mortgagee Letter 2015-12 (Apr. 30, 2015)
In Mortgagee Letter 2015-12, HUD rescinded its prior guidance to reverse mortgage servicers on non-borrowing spouses in Mortgagee Letter 2015-03. For more information on non-borrowing spouse issue, please see the August 2014 and February 2015 newsletters.
PLI Training: Foreclosure Litigation – Real World Solutions That Work For Both Sides 2015 (July 14; Free)
Register here (choice between live in San Francisco and webcast options).
Why You Should Attend
This substantive training provides an overview of:
- Ways to avoid foreclosure litigation by resolving disputes before filing suit, with the commentary of industry leaders representing both borrowers’ and the servicers’ perspectives;
- Foreclosure litigation and where there is common ground – which arguments help your case, which do not add anything to it, and which actually hurt your client’s chances of a favorable resolution from both “sides”; and
- A summary of recent decisions and developments regarding the California Homeowner’s Bill of Rights and the Consumer Financial Protection Bureau’s Loan Servicing Rules.
The half-day training assumes familiarity with the basics of non-judicial foreclosures in California, but practitioners at all experience levels will benefit from this training. The panelists are noted experts in mortgage servicing, consumer and housing law who will cover a broad range of topics in foreclosure avoidance and litigation with real-world examples.
What You Will Learn
- Loss mitigation options for homeowners
- Foreclosure litigation perspectives from attorneys representing both borrowers and lenders
- Litigation strategies in foreclosure cases
- New laws and cases affecting foreclosure mortgage servicing litigation
Who Should Attend
Practitioners who want to gain a deeper understanding of the foreclosure process in California, as well as attorneys and corporate lawyer looking for tools to represent their clients in foreclosure cases. The sessions will address issues pertinent to those new to foreclosure litigation, plaintiff or defense side, as well as experienced practitioners.
 The scope of this article is by no means exhaustive. Advocates may also wish to explore possible claims for intentional interference with contractual relations, conversion, trespass, libel, and wrongful foreclosure. See National Consumer Law Center, Foreclosures and Mortgage Servicing (5th ed. 2014), Chapter 4.
 Lueras v. BAC Home Loans Servicing, LP, 221 Cal. App. 4th 49, 63 (2013) (internal citations omitted).
 See, e.g., Alvarez v. BAC Home Loans Servicing, LP, 228 Cal. App. 4th 941, 944 (2014).
 231 Cal. App. 3d 1089, 1096 (1991).
 Id. (citing Wagner v. Benson, 101 Cal. App. 3d 27, 25 (1980) and Connor v. Great Western Sav. & Loan Ass’n, 69 Cal. 2d 850 (1968) (active participation involves extensive control and profit sharing)).
 Id. at 1096-97.
 See, e.g., Alvarez v. BAC Home Loans Servicing, LP, 228 Cal. App. 4th 941 (2014); Osei v. Countrywide Home Loans, 692 F. Supp. 2d 1240, 1249 (E.D. Cal. 2010).
 Osei, 692 F. Supp. 2d at 1249.
 Maomanivong v. National City Mortgage Co., 2014 WL 4623873, at * 14 (N.D. Cal. Sept. 15, 2014).
 Ansanelli v. JP Morgan Chase Bank, N.A., 2011 WL 1134451, at *7 (N.D. Cal. Mar. 28, 2011).
 2010 WL 1881098, at *2 (N.D. Cal. May 10, 2010).
 Id. at *3.
 Id. (emphasis supplied).
 228 Cal. App. 4th 941, 945 (2014).
 Id. at 949 (quoting Jolley v. Chase Home Finance, LLC, 213 Cal.App.4th 872, 900 (2013).
 Id. at 949.
 Lueras v. BAC Home Loans Servicing, LP, 221 Cal. App. 4th 49 (2013); see also Guillermo v. Caliber Home Loans, Inc., 2015 WL 1306851, at *7 (N.D. Cal. Mar. 23, 2015) (quoting this language from Lueras).
 Alvarez, 228 Cal. App. 4th at 949; Garcia v. Ocwen Loan Servicing, LLC, 2010 WL 1881098, at *2 (N.D. Cal. May 10, 2010).
 Garcia, 2010 WL 1881098, at *3.
 Segura v. Wells Fargo Bank, N.A., 2014 WL 4798890, at *13 (C.D. Cal. Sept. 26, 2014).
 Id. at *13; see also Jolley v. Chase Home Finance, LLC, 213 Cal.App.4th 872, 906 (2013) (finding a duty of care in loan modification process).
 Guillermo v. Caliber Home Loans, Inc., 2015 WL 1306851 (N.D. Cal. Mar. 23, 2015); Alvarez, 228 Cal. App. 4th at 945; Rijhwani v. Wells Fargo Home Mortgage Inc., 2014 WL 890016, at *17 (N.D. Cal. Mar. 3, 2014).
 See, e.g., Khan v. CitiMortgage Inc., 975 F. Supp. 2d 1127, 1147 (E.D. Cal. 2013).
 Guillermo, 2015 WL 1306851, at * 5 (no facts showing that servicer mishandled documents in loan modification review, and plaintiff did not allege that failure to properly process their application deprived them of the possibility of obtaining a loan modification).
 Maomanivong v. National City Mortgage Co., 2014 WL 4623873, at *2-3, 15 (N.D. Cal. Sept. 15, 2014) (complaint alleged that defendant urged plaintiff to refrain from reinstating her loan because she qualified for a modification and that would be her “best option,” misrepresented that it would not foreclose while her modification was under review, and then foreclosed anyway; however court noted that there was “no indication that a loan modification actually would have been approved” had she been properly reviewed).
 See Alvarez, 228 Cal. App. 4th at 951 (noting that plaintiffs alleged they were qualified for the modification which servicer’s conduct barred them from obtaining).
 See Osei v. Countrywide Home Loans, 692 F. Supp. 2d 1240, 1250 (E.D. Cal. 2010) (finding a negligence claim based on lender’s duty of care to make the disclosures required by RESPA).
 12 C.F.R. § 1024.41(b)(1); (c)(1); (f).
 Lueras v. BAC Home Loans Servicing, LP, 221 Cal. App. 4th 49, 68 (2013).
 Id. at 69.
 Garcia v. Ocwen Loan Servicing, LLC, 2010 WL 1881098, at *2 (N.D. Cal. May 10, 2010) (citing Fox v. Pollack, 181 Cal.App.3d 954, 962, 226 Cal.Rptr. 532 (1986)).
 Ragland v. U.S. Bank Nat. Ass’n, 209 Cal. App. 4th 182, 199-200 (2012) (citing Lazar v. Superior Court, 12 Cal.4th 631, 638 (1996)).
 Garcia, 2010 WL 1881098, at *2; see also Erickson v. Long Beach Mortgage Co., 2011 WL 830727, at *5 (W.D. Wash. Mar. 2, 2011) aff’d, 473 F. App’x 746 (9th Cir. 2012) (rejecting fraud claim based on representation that making three monthly trial payments would qualify the plaintiffs for a loan modification; promise of a modification in the future is not a misrepresentation of existing fact).
 Garcia, 2010 WL 1881098, at *2.
 Ragland, 209 Cal. App. 4th at 196-97.
 Id. at 196-99.
 Khan v. CitiMortgage Inc., 975 F. Supp. 2d 1127, 1141 (E.D. Cal. 2013).
 Tarmann v. State Farm Mut. Auto. Ins. Co., 2 Cal. App. 4th 153, 157 (1991).
 Quinteros v. Aurora Loan Servs., 740 F. Supp. 2d 1163, 1172-73 (E.D. Cal. 2010).
 See Harvey G. Ottovich Revocable Living Trust Dated May 12, 2006 v. Wash. Mut., Inc., 2010 WL 3769459 (N.D. Cal. Sept. 22, 2010); Mehta v. Wells Fargo Bank, N.A., 737 F. Supp. 2d 1185, 1204 (S.D. Cal. 2010) (“The fact that one of Defendant Wells Fargo’s employees allegedly stated that the sale would not occur but the house was sold anyway is not outrageous as that word is used in this context”).
 Singh v. Wells Fargo Bank, 2011 WL 66167, at *8 (E.D. Cal. Jan. 7, 2011).
 See Erickson v. Long Beach Mortgage Co., 2011 WL 830727, at *7 (W.D. Wash. Mar. 2, 2011), aff’d, 473 F. App’x 746 (9th Cir. 2012)
 Ragland v. U.S. Bank Nat. Ass’n, 209 Cal. App. 4th 182, 204-05 (2012).
 Spinks v. Equity Residential Briarwood Apartments, 171 Cal. App. 4th 1004, 1045-46 (2009).
 Ragland, 209 Cal. App. 4th at 204-05.
 Davenport v. Litton Loan Servicing, LP, 725 F. Supp. 2d 862, 884 (N.D. Cal. 2010).
 Id. (emphasis supplied)
 Erickson v. Long Beach Mortgage Co., 2011 WL 830727, at *7 (W.D. Wash. Mar. 2, 2011), aff’d, 473 F. App’x 746 (9th Cir. 2012).
 Ragland, 209 Cal. App. 4th at 203-04 (explaining that recovery based on damage to property may be had for intentional infliction of emotional distress, but not generally for negligent infliction of emotional distress).
 Id. at 205. But see Davenport, 725 F. Supp. 2d at 884 (allowing for the possibility of negligent infliction of emotional distress with no mention of this issue).
 Davenport, 725 F. Supp. 2d at 885.
 See Restatement (First) of Restitution § 1 (2005).
 Vician v. Wells Fargo Home Mortgage, 2006 WL 694740 (N.D. Ind. Mar. 16, 2006); see also Ellsworth v. U.S. Bank, 30 F. Supp. 3d 886 (N.D. Cal. Mar. 31, 2014) (borrowers stated unjust enrichment claim where servicer allegedly manipulated force-placed flood insurance coverage, provided kickbacks, and backdated policies); Casey v. Citibank, 915 F. Supp. 2d 255 (N.D.N.Y. 2013) (allegations of unnecessary or excessive flood insurance).
 This opinion is attached at the end of the newsletter.