In Valbuena v. Ocwen Loan Servicing, LLC, (2015) 237 Cal.App.4th 1267, the court of appeal held that the Homeowner’s Bill of Rights (“HBOR”, Civil Code §§ 2920.5 et al.), did not require a defaulting debtor to tender the loan balance as a condition of filing suit for violations of the pre-foreclosure sale loan modification requirements contained in the HBOR.
This was a “dual tracking” case. Dual tracking occurs when a bank forecloses on a loan while it is in the process of negotiating with the borrower to avoid foreclosure, and it is generally prohibited by the HBOR. (Civil Code §§ 2923.6, 2924.12.) The HBOR provides that a mortgage servicer must offer the borrower a loan modification or workout plan, and that the loan servicer it shall not record a notice of default or conduct a trustee’s sale while the loan modification application is pending — and otherwise not until the loan servicer makes a written determination that the borrower is not eligible and the 30 day period to appeal that determination has expired.