The recent case of Taniguchi v. Restoration Homes, LLC, on rehearing, held unenforceable a default clause in a loan modification agreement that purported to allow the lender to call due a deferred principal and interest balance if the borrower ever defaulted on the new, modified reduced payment schedule. The court found that this constituted an invalid waiver of the borrower’s right of reinstatement under § 2924c of the Civil Code, and that the modification transaction was a “renewal” within the meaning of Civ. Code, § 2953, which directly prohibits a prospective waiver of certain statutory rights, including § 2924c, “at the time of or in connection with the making of or renewing of any loan secured by a deed of trust. . ."

Although Taniguchi arose in the context of a single family residential loan transaction, the decision does not hinge on the application of any of the specialized one-to-four unit foreclosure protections contained in the Homeowner’s Bill of Rights and other legislation that responded to the 2008 mortgage crisis. Rather, it involves the application of the right of reinstatement and the antiwaiver provisions of the Civil Code that apply regardless of the nature of the loan or the collateral, if it is secured by real property.