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Shapiro v. SPS – Judge Gets It Right in Ruling on CA HBOR


In ruling on Sage Point Lender Service’s (“SPS”) motion to dismiss the plaintiff’s complaint, the judge inShapiro v. SPS delievered a swift blow to an argument many servicers make in an attempt to dodge the plain language and purpose of the California Homeowner’s Bill of Rights (“HBOR”).  Under the HBOR, a servicer cannot “dual track” a homeowner into foreclosure while he or she is under review for a loan modification.  The statute imposes certain requirements on the mortgage loan servicer once a homeowner has submitted a “complete” loan modificaiton application and the servicer accepts the same.  In Shapiro, SPS argued (as many servicers do), that while it received documents it requested from the homeowner for a loan modification review, it now believed that the applicaiton was not “complete.”  Despite the fact that SPS never told the homeowner that the application was incomplete, it now advanced this argument as a way to dodge liability under the HBOR.  The judge’s response to this argument called out the lack of logic and common sense in SPS’s approach:

Defendant argues that Plaintiff never submitted a “complete” loan modification application, and thus was not entitled to the statute’s protection. (Motion at 10.) This argument  borders on absurd. Plaintiff submitted an application. When asked to submit additional documents, Plaintiff complied. Defendant then informed Plaintiff he had not submitted required documents, without identifying which documents were missing. Defendant, in effect, prevented Plaintiff from submitting a complete application. Defendant’s argument would render HBOR’s protections meaningless. Mortgage servicers could deny every application for a loan modification, citing missing documents as an excuse. Even better, the servicer would not have to identify which documents were missing. The California legislature could not have intended to allow the rigged game that Defendant’s argument suggests.

Read the opinion here: Shapiro+v+Sage+Point+Lender+Services+(CD+Cal+Oct+24+2014)

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