Billesbach v. Specialized Loan Servicing LLC
63 Cal.App.5th 830
| Cal. Ct. App. | 2021Background:
- In 2006 the Billesbachs took a HELOC; only Mrs. Billesbach signed the promissory note; she died in 2008 and Mr. Billesbach continued payments until default.
- Specialized Loan Servicing (SLS) began servicing the loan, recorded a notice of default (NOD) in April 2016 that included a §2923.55 compliance declaration despite allegedly not contacting Mr. Billesbach first.
- Mr. Billesbach sued in August 2016 and obtained a TRO; SLS then assigned a single point of contact, reviewed his loan‑mod application, and on December 19, 2016 offered a trial‑period modification requiring an initial payment by January 25, 2017.
- The foreclosure sale was postponed to February 27, 2017; Mr. Billesbach did not make the required trial payment by the deadline, the offer lapsed, and minutes before the sale his counsel submitted alternative terms but the sale proceeded and was recorded.
- Mr. Billesbach amended to allege HBOR violations (single point of contact §2923.7, pre‑NOD contact §2923.55, false declaration §2924.17, and dual‑tracking §2923.6); the trial court granted SLS summary judgment, finding any material pre‑sale violations cured and §2923.55/2923.6 inapplicable at the time; reconsideration was denied after legislative reenactment of those sections.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether SLS’s pre‑sale HBOR violations (§2923.55, §2923.7, §2924.17) were cured or required recording a new NOD | Billesbach: recording a new NOD was required to cure pre‑sale violations; without it violations remained material | SLS: cured material violations by postponing sale, assigning SPOC, communicating, reviewing application and offering a trial modification; no new NOD needed | Court: cure by those measures satisfied HBOR purpose; remaining technical defects were immaterial and no new NOD required |
| Whether SLS violated the dual‑tracking prohibition (§2923.6) by conducting sale while modification was "pending" | Billesbach: negotiations and a last‑minute submission show application remained pending; sale thus barred | SLS: offered a trial modification with a January 25 deadline; offer expired when payment not made; sale after expiration was lawful | Court: offer expired when not accepted; application was not pending at sale; no §2923.6 violation |
| Whether the misaddressed trial‑period offer or procedural lapses made the offer invalid | Billesbach: offer addressed to estate and trial period is not a final offer, so protections were not satisfied | SLS: trial‑period offer qualifies as a loan‑modification offer and Billesbach understood it was directed to him | Court: trial‑period offer sufficed; misaddressing was not a material statutory violation |
| Whether court should grant reconsideration after Legislature reenacted §§2923.55 and 2923.6 | Billesbach: reenactment constituted new law warranting reconsideration | SLS: trial court had evaluated the merits; reenactment did not change legal outcome | Court: reenactment did not alter the result; denial of reconsideration affirmed |
Key Cases Cited
- Moeller v. Lien, 25 Cal.App.4th 822 (explains nonjudicial foreclosure framework)
- Mabry v. Superior Court, 185 Cal.App.4th 208 (pre‑HBOR noncompliance with pre‑NOD rules and remand posture; distinguished)
- Jolley v. Chase Home Finance, LLC, 213 Cal.App.4th 872 (describes harms from dual‑tracking)
- Schmidt v. Citibank, N.A., 28 Cal.App.5th 1109 (technical pre‑sale defects immaterial where borrower had meaningful opportunity to discuss options)
- Berman v. HSBC Bank USA, N.A., 11 Cal.App.5th 465 (material violation where procedural truncation undermined appeal rights)
- Gilmore v. Wells Fargo Bank N.A., 75 F.Supp.3d 1255 (N.D. Cal.) (violation cured without recording new notice once servicer acted on application)
- Cardenas v. Caliber Home Loans, Inc., 281 F.Supp.3d 862 (N.D. Cal.) (materiality test: affected loan obligations, disrupted modification process, or caused harm)
- Regents of Univ. of California v. Superior Court, 4 Cal.5th 607 (summary judgment legal standard)
- Yanowitz v. L'Oreal USA, Inc., 36 Cal.4th 1028 (de novo review and evidentiary construction on summary judgment)