Min v. Selene Finance, LP

Background

Cho Ung Min owns the property at 7229 Shannon Park Court, South San Francisco, California, which he acquired in 2004. During financial hardship related to the COVID-19 pandemic, Rushmore Loan Management, LLC approached him about mortgage assistance. Min says Rushmore representatives told him that he could stop making payments during a forbearance period, resume regular payments afterward, and have the missed payments added to the end of the mortgage as a non-interest-bearing balance. He entered a forbearance plan and stopped making payments.

After Min was able to resume roughly $4,200 monthly payments, Selene Finance, LP had become his loan servicer. Min says Selene refused his regular payment and demanded approximately $70,000 to $80,000 instead. Selene told him the loan was in default and that it would proceed to foreclosure. Min also says Selene repeatedly lost his loan-modification materials, required him to resubmit them, and did not provide a consistently reachable single point of contact.

Selene planned a trustee’s sale for December 27, 2023, but the court previously stopped that sale temporarily. Selene and Rushmore both opposed a preliminary injunction, although each later withdrew its motion to dismiss.

Claims and preliminary-injunction standard

Min asserted eight causes of action. They included claims under California’s Homeowner Bill of Rights concerning a single point of contact, the right to reinstate the loan, and honoring a prior loan-modification or foreclosure-prevention alternative; a claim that Rushmore failed to provide required advice about the effect of the forbearance plan; bad-faith and negligent-misrepresentation claims; promissory estoppel; and claims under California’s unfair competition law.

The court applied the four preliminary-injunction factors: likelihood of success or serious questions about the merits, likely irreparable harm without relief, the balance of hardships, and the public interest. Under the Ninth Circuit’s alternative “serious questions” approach, a plaintiff may obtain an injunction by showing serious merits questions, that the balance of hardships tips sharply in the plaintiff’s favor, likely irreparable harm, and that an injunction serves the public interest.

Court’s analysis

The court concluded that Min raised serious questions about several claims. It rejected Selene’s argument that the written forbearance agreement defeated Min’s claims because Min based his claims on alleged oral misrepresentations and the defendants’ handling of his loan-modification applications. The written agreement stated that suspended payments would need to be repaid or otherwise addressed through a permanent workout option, but the court held that this language did not, at the preliminary stage, invalidate Min’s allegations that Rushmore representatives gave him different information. Min’s declaration and the defendants’ inability to affirmatively disprove his account were enough to raise serious questions about his understanding of the agreement.

The court also found serious questions about whether the defendants failed to provide a legally compliant single point of contact under California Civil Code section 2923.7. Selene produced an email showing that it told Min in July 2023 that a single point of contact had been assigned, but the court noted that Min had begun seeking loan modification at least as early as June 2022. The evidence did not show that a single point of contact had been provided timely or that Min had received a direct way to communicate with that person.

The court found additional serious questions about whether Rushmore adequately advised Min about the effect of the COVID-19 forbearance plan under California Civil Code section 3273.11. Rushmore produced no evidence refuting Min’s account, and the court stated that the credibility of the parties’ assertions would be addressed at trial. The court also found serious questions about Min’s unfair-competition claim to the extent it was based on the alleged statutory violations. It found that the record plausibly supported a bad-faith claim against Rushmore, but noted that the record was less clear about a contractual relationship between Min and Selene.

Other injunction factors

The court found that foreclosure and possible eviction from Min’s only home would cause irreparable harm that monetary damages could not adequately repair. The court noted that Min faced losing approximately $500,000 in home equity. It also determined that the harm to Min from foreclosure outweighed the harm to the defendants from delaying foreclosure while the case was resolved.

The court concluded that the public interest favored the injunction because California’s Homeowner Bill of Rights seeks to ensure that borrowers receive a meaningful opportunity to pursue loan modifications and other alternatives to foreclosure. Although the public has some interest in enforcing a valid secured property interest, the court found that interest outweighed by the public interest in compliance with those protections.

Disposition

Judge William H. Orrick granted Min’s motion for preliminary injunctive relief. The defendants, their servants and employees, and all persons acting in concert with them or on their behalf were enjoined from directly or indirectly initiating foreclosure proceedings on the property pending further order of the court. The court stated that Selene could proceed with foreclosure if Min’s claims were ultimately denied, and it required no additional bond from Min.