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Jeffrey B. Steiner and Scott A. Weinberg

In the current economic climate, created in large part by the Covid-19 virus, many borrowers are facing economic, logistical and institutional challenges and approaching their lenders with loan modification requests. Therefore, in handling the large number of such requests, it is important for lenders and servicers to remember to exercise caution in their communications with these borrowers in order to avoid potential liability for negligence and/or negligent misrepresentation.


A recent California case, although arising in the residential context, serves as a reminder to all lenders and servicers. In Weimer v. Nationstar Mortg., 2020 WL 1610159 (Cal. Ct. App. Apr. 2, 2020), the California Court of Appeals recently held servicers liable for negligence and negligent misrepresentation as a result of their mishandling of a borrower’s loan modification applications and communications made in connection therewith.

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