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Is Bank negligent for acting on Authorization to Opt out modification without confirming if fax genuine from borrower 4 security

Perris, CA |

My father(82) during a Modification learned(OCT 19/12) there was a sale date to foreclose.He went to bank mod dept & discovered a daughter had sent a fax to opt out on modification and to let it go to Foreclosure. Bank never sent my father a letter or phone call to confirm this request was made by him. Found out the opted modification had been approved but bank closed it due to forged authorization fax they received. Bank said he could reapply again. He wrote a statement at bank stating this daughter can NOT be authorized at anytime and had it notarized at bank .Bank now states they don't have that Fraudulent Authorization so he can file police report. Bank has been asking for same docs again & again along with current docs to maybe prolong application. Mod may not get approved this time

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Attorney answers 2


Many courts in California hold that Banks do not owe their customers a negligence duty when they are acting in their traditional role as a lender. This has been extended to banks and loan servicers in the context of loan modifications. Not all courts will follow this line of case law, and certain circumstances may create a negligence duty. Whether his daughter was authorized to act on his behalf regarding the account and whether the forged authorization was so obvious that it should have placed the bank on notice that something was wrong will be important factors in determining whether a negligence duty was owed and whether that duty was breached.

If you're currently under review for a modification, the recently passed Homeowner's Bill of Rights prevents the bank from simultaneously foreclosing (aka dual tracking). There are also appeal rights available to you if the modification is denied.

Many time the loan modification process can be long and difficult. Stick with it and provide the exact documents requested as quickly as you can and maintain good records of your communications (both written and verbal) with the bank.

Lastly, there may certainly be a cause of action against the daughter if he is denied for a modification. Your father should consult an attorney on this matter so that he can fully understand his rights and potential claims.

The above is general legal analysis. It is not "legal advice" but analysis, and different lawyers may analyze this matter differently, especially if there are additional facts not reflected in the question. The above response does not create an attorney/client relationship. I am not your attorney until retained by a written retainer agreement signed by both of us. See also terms and conditions item 9, incorporated as if it was reprinted here


We don't know if this is a HAMP Mod or non-hamp mod situation. The bank acted on a 'forged authorization fax.' This fact was brought to their attention. The bank should have reissued the mod. A 'forged authorization fax' should not be held against your eligibility (after same is promptly disclosed to the bank). Cases have held under certain facts that banks/ servicers 'acting beyond its normal role as lender' may owe a duty to borrower (in the modification and or foreclosure context). The bank invited you to reapply but is asking for the same docs over and again. Under HAMP for example, the bank/servicer must update the financial docs every 90 days, so it is in your interest to comply and jump through every hoop. Maybe you are right and you will be denied, but you should consider satisfying each request and document your compliance. Violations of HAMP (and California Law) may be actionable to support (CA) state court causes of action. You are entitled to a written DENIAL stating the reasons for the denial. If the reasons are erroneous you are entitled (and or obligated) to dispute same for reconsideration (and or appeal). New California Law (Jan. 2013) codifies many borrower protections in this context, supplies a private right of action to sue (with damages), and prohibits seeking foreclosure during the processing of the modification (much like the federal HAMP regulations).

Cases to review which may support your (potential) causes of action (righst) are: Wigod 2012, In Re BOA, Ansanelli, Allen, Bosque, Durmic, Turbeville, Biakanja, etc. To review examples of California cases which I obtained rulings overruling the banks' Demurrers are located at:

We don't not have all the facts to answer this question fully, but you (elder father) may have rights to enforce for facts establishing promises/reliance/detriment. You should hire an attorney.

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