A "Loan Workout Plan" Is Not An Agreement To Modify A Loan

In Nungaray v. Litton Loan Servicing, LP (2011) 200 Cal.App.4th 1499, the California Court of Appeal held that (i) a Loan Workout Plan is not an enforceable agreement to modify a loan and (ii) a bank does not violate the "one-form-of-action" rule by accepting payments under such a Plan, then proceeding with foreclosure.

The Nungarays refinanced their home in 2006, then later defaulted on their loan. The bank initiated non-judicial foreclosure proceedings. In response, the Nungarays negotiated a Loan Workout Plan pending consideration for a permanent loan modification. The Plan required the Nungarays to make monthly payments from August to November 2009 and also called for the Nungarays to provide certain financial records to the defendants necessary to determine whether the loan should be permanently modified. The Nungarays made the necessary payments but failed to provide the financial information required. The bank denied their request for modification and