## Facts

- Amado and Myrna Valbuena bought a home in Carson, California.
- They took out a $485,000 loan secured by a deed of trust; the loan was later assigned to Deutsche Bank.
- After the Valbuenas fell behind, a nonjudicial foreclosure sale was scheduled; Ocwen became the loan servicer after notice of sale but before the sale.
- Ocwen sent a letter inviting a loan-modification application and stating that if a “complete” application and required documents were submitted more than seven business days before the sale, no foreclosure sale would occur during review.
- The Valbuenas alleged they promptly submitted a modification application and, when Ocwen requested additional documents, provided them the same day.
- They alleged their application was complete more than seven business days before the sale and remained pending when Ocwen proceeded with the trustee’s sale.
- Ocwen later stated the Valbuenas were ineligible because the sale was less than seven days away, and the foreclosure sale went forward.

## Issues

1. Whether a borrower alleging a violation of Civil Code § 2923.6 (HBOR dual-tracking) must plead tender of the full indebtedness after a completed nonjudicial foreclosure sale.
2. Whether the complaint sufficiently alleged that a “complete” first-lien loan-modification application was pending at the time of the foreclosure sale to state a claim under Civil Code § 2923.6.

## Decision

- The Court of Appeal reversed the judgment sustaining Ocwen’s demurrer without leave to amend.
- Tender of the loan balance was not required to pursue a statutory claim under Civil Code § 2923.6.
- Accepting the pleaded facts as true, the Valbuenas sufficiently alleged a complete loan-modification application was pending at the time of the sale.
- The case was remanded for further proceedings.

## Legal Principles

- Civil Code § 2923.6 prohibits a servicer from recording certain foreclosure documents or conducting a trustee’s sale while a borrower’s complete first-lien loan-modification application is pending.
- The traditional tender rule applicable to certain common-law challenges to foreclosure sales does not bar statutory HBOR dual-tracking claims under § 2923.6.
- On demurrer, the court accepts well-pleaded facts as true and draws reasonable inferences in favor of the plaintiff; disputes about whether an application was actually complete are generally matters for later proof.

## Conclusion

The court held that borrowers suing under Civil Code § 2923.6 for dual tracking are not required to plead tender of the full debt and that allegations of prompt submission of the application and requested documents were sufficient to plead a complete, pending modification application at the time of foreclosure.


Valbuena v. Ocwen Loan Servicing, LLC, 188 Cal. Rptr. 3d 668 (Cal. Ct. App. 2015)