I woud need far more facts than what's set forth in the question. What type of case was it: family law or pure real property? What was the motion? Has a motion for reconsideration been filed? While, as one commentator noted, there may have been malpractice on the part of the attorney, legal malpractice cases are often difficult to win, particularly if the cause of the problem ios the client. This is a situation where the client should sit down with a new attorney and get a second opinion...
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Read the loan documents carefully. They will spell out the rights of the lender. It is not uncommon for a bank to have a provision in the loan contract which permits them to purchase insurance and charge you for it. Check to see if the loan contract contains an arbitration clause. If it does, you may have to take the bank to arbitration, but if the bank has acted strictly within the provisions of the loan contract, you may be out of luck.
Send a notarized letter to the DMV explaining exactly what happened. Be sure to swear to the truth of your statements and be sure to have it notarized. That should work, but if it doesn't, you may have to seek a declaratory judgment from the court.