You can read the order here: JOHN SCHLEGEL V. WELLS FARGO BANK N.A | Ninth Circuit – Equal Credit Opportunity Act… Default Notices Violated the Loan Modification Agreement

Bloomberg-

Wells Fargo & Co. (WFC) must face borrowers’ claims that it violated the Equal Credit Opportunity Act by starting foreclosure proceedings while the customers were making payments under a loan-modification agreement.

The U.S. Court of Appeals in San Francisco today reinstated the claims of John and Carol Schlegel, who received default notices after the bank told them to proceed with payments under a loan-modification plan and failed to respond to their inquiry seeking an explanation.

The bank’s action, the court found, constituted a revocation of credit without notice required under the Equal Credit Opportunity Act, which makes it illegal for creditors to discriminate against applicants and requires them to provide an explanation within 30 days when denying or revoking credit or changing credit terms.

“While sending a mistaken default notice would not necessarily constitute an adverse action, the Schlegels’ complaint describes egregious conduct that goes far beyond clerical error,” the three-judge panel said.

[BLOOMBERG]

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