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Rufini v. CitiMortgage – Appellate Court Finds Citimortgage May Be Liable For Denying Loan Modification With Bogus Excuse


Rufini v. CitiMortgage Inc. is yet another example of how California appellate courts are not letting bank servicers get away with loan modification misrepresentations and deceptive practices.

In Rufini, the plaintiff homeowner entered into a trial loan modification agreement with Citimortgage and timely made all trial modification payments.  Citimortgage advised him that the loan modification would be ready in three days.  Rufini was concerned about the reliability of Citimortgage’s promise and temporarily rented out his home to offeset his expenses until he could return.  Shortly after, Citimortgage denied the loan modification allegeldy because the home was “not owner occupied.”  Rufini contacted Citmortgage and was assigned to a loan modification representative who did not return his calls for 3 weeks.  When he finally reached the representative, he was told the foreclosure sale woud like not take place for another few weeks and the reprsentative asked for additional information about this income.  In the meantime, Citimortgage transferred the loan to PennyMac who foreclosed on the home without further notice to Rufini.

At the trial court level, Citimortgage filed a motion to dismiss Rufini’s suit and the trial court judge agreed with Citimortgage and dismissed Rufini’s claims. Rufini appealed the court’s order.

In reviewing the legal claims and arguments made by both parties, the appellate court found that the trial court was wrong in dismsising Rufini’s claims for breach of contract, negligent misrepresentationa, and unfair business practices.  The appellate court held that Rufini had adquately pled facts that showing Citimortgage had entered into an enforceable contract when it offered Rufini a modification and accpeted his payments.

The court’s ruling is important as to Citimortgage’s claim that Rufino’s home wasn’t his primary residence.  In determining whether this argument had any merit, the court looked to the HAMP Guideline directive, which provides that in order to meet the primary residence requirement a borrower need only show “reasonable evidence such as utility bills in the borrower’s name.”  The court found that Citimortgage’s claim that Rufino was temporarily renting out his home did not bar him from showing it was nonetheless his primary residence.

This case is yet another example of how courts are using HAMP Guideline directives to measure the reasonableness of servicers’ conduct in the loan modification process.  Read the Case here: Rufini v CitiMortgage Inc

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