Home Was Sold While In Compliance With Mortgage Modification Plan; Demurrer Should Not Have Been Sustained.

In 2006, plaintiff refinanced her home and executed a promissory note secured by the deed of trust. The deed of trust was later assigned to defendants. A notice of default and election to sell under the deed of trust were executed and recorded. After negotiations, defendant offered plaintiff a modification plan which required her to make three monthly payments as a trial plan, and, if she made those payments, defendants would provide her with a mortgage modification agreement. Plaintiff alleged she complied and defendant mailed her a mortgage modification agreement, which she signed and sent back. She says defendant promised to return to her a signed copy of the agreement, but defendant never sent it. She continued making her monthly payments. At some point, defendant returned one of her checks to her because it was not certified, a requirement not set forth in the modification agreement. Shortly thereafter, the property was sold at auction, far below market value, despite the fact plaintiff never received a notice of default or notice of trustee sale. After she was forced to move, plaintiff filed an action alleging breach of the mortgage modification agreement and wrongful foreclosure. The trial court sustained defendants’ demurrer without leave to amend. The appellate court reversed, stating: “We conclude the homeowner sufficiently alleged equitable estoppel to preclude the lender’s reliance on the statute of frauds defense. We also conclude that the homeowner sufficiently alleged a cause of action for wrongful foreclosure.” (Chavez v. Indymac Mortgage Services (Cal. App. Fourth Dist., Div. 1; September 19, 2013) 219 Cal.App.4th 1052.)