Ninth Circuit Clarifies Amount in Controversy Standard Where Borrower Seeks Only "Temporary" Foreclosure Stay Pending Loan Modification Review

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Ninth Circuit Clarifies Amount in Controversy Standard Where Borrower Seeks Only “Temporary” Foreclosure Stay Pending Loan Modification Review

Ninth Circuit Clarifies Amount in Controversy Standard Where Borrower Seeks Only “Temporary” Foreclosure Stay Pending Loan Modification Review

NatLawReview-

The Ninth Circuit recently limited the availability of diversity jurisdiction for certain cases with claims involving mortgage loan modifications. Specifically, in Corral v. Select Portfolio Servicing, Inc., the Ninth Circuit held that, where the plaintiff-borrower “seeks only a temporary stay of foreclosure pending review of a loan modification application … the value of the property or amount of indebtedness are not the amounts in controversy.” — F.3d —-, 2017 WL 6601872, at *1 (9th Cir. Dec. 27, 2017). Rather, to satisfy the amount in controversy requirement in such cases, parties must demonstrate that the value of the temporary delay in foreclosure exceeds $75,000, “such as the transactional costs to the lender of delaying foreclosure or a fair rental value of the property during pendency of the injunction” (in addition to any compensatory damages plaintiffs may be seeking). Id. at *5.

In Corral, the plaintiff-borrower filed an action in California state court seeking to enjoin a foreclosure sale until her loan modification application was reviewed and also seeking unidentified compensatory damages and costs. Id. at *2, 3. Defendant removed the action to federal court arguing that the $75,000 amount in controversy requirement had been met because the original principal balance on the loan was $680,000 and the total outstanding indebtedness was in excess of $800,000. Id. at *2. The district court agreed and denied plaintiff’s motion to remand. Id.

[NATLAWREVIEW]

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