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UTA’s Amicus Brief

T. Robert Finlay, Esq.

With the Help of UTA’s Amicus Brief, the California Supreme Court Affirms That Loan Servicers Do Not Owe Borrowers a Duty of Care When Reviewing a Loan Modification Application.

Many of you have been following the split in the California Courts of Appeals on whether loan servicers owe a duty of care to borrowers when reviewing their loan modification applications. In a major victory for the financial services industry, the California Supreme Court has affirmed in full the appellate court decision in Sheen v. Wells Fargo Bank, holding that “when a borrower requests a loan modification, a lender owes no tort duty sounding in general negligence principles to “process, review and respond carefully and completely to” the borrower’s application.”

The Court noted that any more extensive duty would need to be decided upon by the Legislature, not the courts. In collaboration with the MBA, CMBA and CMA, the UTA, through the firms of Kirby & McGuinn and Wright, Finlay & Zak, filed an amicus brief in support of Wells Fargo Bank’s position and to note that the Supreme Court’s opinion quoted from that amicus brief in explaining its decision. This is a game-changer for borrower lawsuits arising out of disputes over loan modifications.  Servicers and investors should now be able to defeat claims of negligent handling of loan modification applications on demurrer or motion to dismiss, rather than having to engage in expensive discovery and summary judgment.

Thank you to all the UTA members for supporting our amicus efforts in the industry.  Please feel free to contact Marty McGuinn at or Robert Finlay at if you have any questions about the decision.

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