UTA Opposes Request for Depublication in Case Involving Loan Modification Process

Martin T. McGuinn, Esq.

UTA has opposed a request made by various borrower advocate groups for the California Supreme Court to depublish the recent published court of appeal decision (Nungaray, et al., v. Liton Loan Servicing, LP, et al).  The Nungaray case involved a HAMP trial modification plan, the completion of which was one of a number of conditions to borrower receiving a permanent loan modification agreement.  In a letter to the California State Supreme Court on behalf of UTA, the Association’s Legal Resources Chair, Martin McGuinn, Esq., Kirby & McGuinn wrote:  “UTA opposes the request of the National Housing Law Project and the Housing and Economic Rights Advocates … to depublish of the court of appeal’s decision in Nungaray v. Litton Loan Servicing.  UTA believes the published opinion provides clear guidance to its members concerning forbearance postponement and modifications agreements including the Trial Period Plans (“TPP”) under the Home Affordable Modification Program (“HAMP”).  In the Nungaray decision, the court of appeal held that normal contract rules apply to TPPs.  The clarity provided by the Nungaray decision will help foster an environment where all involved in the loan modification process, including borrowers, consumers, lenders, loan servicers, and trustees, can understand the basic framework underlying TPPs in California.”

Phil Adleson, Esq., Adleson, Hess & Kelly, UTA’s Corporate Counsel stated:  “Because of the clarity it adds, the Nungaray decision is good for trustees, loan servicers, lenders, and for borrowers.  Lenders and servicers will be more likely to enter trial payments plans after the Nungaray decision as they will feel more comfortable knowing that trial courts should apply basic contract law to forbearance and modification agreements and that the lender’s acceptance of a partial payment from the borrower during a trial payment plan period should not create an equitable estoppel or a violation of California’s one-form of action anti-deficiency rule.  The Nungaray decision, if left published, should discourage borrowers who have fulfilled the conditions of their trial modification plan from successfully filling frivolous lawsuits to get a second bite at their modification apple.”

In addition to UTA’s letter in opposition to the request to depublish the decision on behalf of Litton and Bank of America, the California Mortgage Association and CitiMortgage also expressed opposition to the request as did KL Gates on behalf of Wells Fargo.

Read UTA’s Letter to the California Supreme Court opposing a request for depublication