I live in California and submitted a loss mitigation application to my loan servicer to modify the first mortgage on my home. I have never applied for a mortgage modification or another type of foreclosure alternative before. The servicer denied my application. Do I have the legal right to appeal this decision?
Yes, probably. In California, a law called the Homeowner Bill of Rights (HBOR) generally gives borrowers the right to appeal a modification denial.
Under HBOR, in most cases, if the servicer denies a borrower's application to modify a first lien loan, the borrower can appeal. (Though, some servicers don't have to provide the right the appeal.) You must submit the appeal within 30 days from the date of the written denial. In your appeal, you'll need to provide evidence that the servicer's determination was in error.
Under HBOR, if your servicer denies your modification application, the servicer must:
The servicer is not allowed to continue foreclosing—for example, by recording a notice of default or notice of sale or holding the foreclosure sale—until:
(Learn about general foreclosure laws and procedures in California.)
You can appeal a loan modification denial only if:
The federal government implemented new mortgage servicing rules as of January 2014 that generally require servicers to give homeowners 14 days to appeal a loan modification denial. This appeal right kicks in if the servicer receives your loan application 90 days or more before the foreclosure sale date.
If you believe that your servicer denied your loan modification in error or didn't provide you with the proper opportunity to appeal the denial, consider talking to a foreclosure attorney to get advice about you what you should do in your particular circumstances.