Law Review: No foreclosure while reviewing loan modification application |

Law Review: No foreclosure while reviewing loan modification application

Jim Porter
Law Review
Jim Porter

Porter’s note: This Law Review is dedicated to the memory of Truckee’s longtime Justice Court Judge George L. Pifer, who served our community well from 1972-1990. Judge Pifer was a capable and conscientious jurist held in high-esteem in the community.

As you may recall, after the 2008 market crash and recession I wrote a handful of Law Review columns strongly criticizing institutional lenders for dealing unfairly with their borrowers. I met with innocent homeowners, many who were talked into filing applications for loan modifications, only afterwards to be foreclosed on by the lender. Most lost their homes. The foreclosing lenders did just fine.


In 2012, California enacted the California Homeowner Bill of Rights to address what I candidly describe as abuse, even fraud, by institutional lenders foreclosing on their California borrowers. The Homeowner Bill of Rights imposed restrictions on lenders foreclosing on owner-occupied residences. Then attorney general Kamala Harris spear-headed the law.

Among other things, the bill prohibits “dual track” foreclosures, which occurs when a lender continues foreclosure proceedings while reviewing a homeowner’s application for a loan modification. Duh.


Before the Homeowner Bill of Rights I met with hundreds of homeowners facing foreclosure. My favorite bank misrepresentation went like this: A representative of the bank would encourage the borrower to stop making payments so they could qualify for a loan modification, assuring the borrower the lender would not foreclose while a loan modification was pending.

Au contraire. The lenders would routinely start foreclosure proceedings after two months of stopped payments. If a borrower could reach a bank representative, virtually impossible to do, the loan foreclosure representative would generally say something like “Who told you that?”


Rosana Bustos was working on a loan modification application when Wells Fargo started foreclosing against her home — completely against the Homeowner Bill of Rights prohibitions against “dual track” foreclosures. She got a temporary restraining order against Wells Fargo and was awarded $42,060 in attorneys fees under the law. Wells Fargo appealed.

Acting presiding Justice Butz of the Third Appellate District Court wrote the opinion. She nailed it.

I love her description of some bank’s practice of dual tracking:

One of the targets of the (Homeowner Bill of Rights) legislation is a practice that has come to be known as “dual tracking.” Dual tracking refers to a common bank tactic. When a borrower in default seeks a loan modification, the institution often continues to pursue foreclosure at the same time. The result is that the borrower does not know where he or she stands, and by the time foreclosure becomes the lender’s clear choice it is too late for the borrower to find options to avoid it. Mortgage lenders call it “dual tracking” but for homeowners struggling to avoid foreclosure, it might go by another name: the double-cross.

Now that’s telling it like it is.


Justice Butz, one of the best, ruled against Wells Fargo writing that when Rosana Bustos was granted a temporary restraining order prohibiting the foreclosure, she was also authorized under Homeowner Bill of Rights to be awarded reimbursement of her attorney fees.

In case you couldn’t tell, I like this Opinion.

Jim Porter is an attorney with Porter Simon licensed in California and Nevada, with offices in Truckee and Tahoe City, California, and Reno, Nevada. Jim’s practice areas include: real estate, development, construction, business, HOAs, contracts, personal injury, accidents, mediation and other transactional matters. He may be reached at or

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