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Posts published in October 2015

5th Cir. Rejects Borrower’s Challenges to MERS, Pooling and Servicing Agreement, Other Claims

The U.S. Court of Appeals for the Fifth Circuit recently held that an assignment of a mortgage deed of trust (“DOT”) from Mortgage Electronic Registration Systems (“MERS”) to an assignee (“Assignee”) was valid under Texas law, because MERS was specifically named as a beneficiary in the DOT and was vested with the power to exercise the rights set forth in the DOT.  Therefore, the Court held, MERS was a valid beneficiary under the Texas Property Code and contract law, and the assignment from MERS to Assignee was valid. The Fifth Circuit further held that the Borrowers lacked standing to challenge…

Fla. App. Ct. (3rd DCA) Applies ‘After Acquired Title’ Doctrine to Save Mortgage Loan

The Third District Court of Appeal of the State of Florida recently affirmed the entry of summary judgment in favor of a mortgagee and against the purchaser at a condominium association assessment foreclosure sale based on the after-acquired title doctrine. A copy of the opinion is available at: Link to Opinion. In July 2007, the borrowers obtained a mortgage loan secured by a condominium unit at a luxury building in Miami Beach. Although the mortgage contained the usual covenant that the borrowers owned legal title to and had the right to mortgage the property, the property was in fact owned…

8th Cir. Holds TILA’s ‘$35 Tolerance’ Right to Cancel in Foreclosures Must Be Exercised After Foreclosure Initiated

The U.S. Court of Appeals for the Eighth Circuit recently rejected an attempt to rescind a mortgage loan and recover damages under the federal Truth in Lending Act (TILA), affirming the district court’s grant of summary judgment in favor of the mortgagee because the borrowers only tried to cancel their mortgage loan before foreclosure proceedings were initiated, and not thereafter. Therefore, the Court held, the borrowers did not qualify for TILA’s expanded right to rescind in foreclosure arising under 15 U.S.C. § 1635(i)(2). A copy of the opinion is available at: Link to Opinion. On September 28, 2009, the borrowers…

Illinois Supreme Court Holds Trustee of Land Trust Has TILA Right to Rescind

The Supreme Court of Illinois recently held that the trustee of a land trust involved in a reverse mortgage loan transaction is entitled to receive disclosures, including notice of the right to rescind, under the federal Truth in Lending Act (TILA), 15 U.S.C. § 1601 et seq. The Court also held that, because the disclosures were not provided to the land trust trustee, the three-day right to rescind was extended to three years after the transaction and the trustee timely exercised that right. In addition, the Court held the trustee’s claim for statutory damages was not time barred. A copy…

7th Cir. Rejects Heightened or Stringent ‘Ascertainability’ Requirement for Class Certification

The U.S. Court of Appeals for the Seventh Circuit recently refused to impose a heightened “ascertainability” requirement at class certification. More specifically, the Court held that plaintiffs do not have to prove at the class certification stage that there is a “reliable and administratively feasible” way to identify class members under Federal Rule of Civil Procedure 23(b)(3), and affirmed the district court’s certification of a class of consumers who purchased a dietary supplement falsely advertised as scientifically tested and proven to relieve joint pain. A copy of the opinion is available at:  Link to Opinion. The putative class plaintiff sued…

NJ Fed. Court Reverses Bankr. Court Ruling that Foreclosure Was Barred by NJ Six-Year Statute of Limitations

The U.S. District Court for the District of New Jersey recently held that New Jersey’s 20-year statute of limitations for residential foreclosures applied to a re-filed foreclosure action, reversing a bankruptcy court’s ruling that the shorter six-year statute of limitations period applied. A copy of the opinion is available at:  Link to Opinion. The borrower obtained a $520,000 mortgage loan in February 2007.  The Mortgage and Note listed March 1, 2037 as the maturity date.  The borrower defaulted in July 2007, and a foreclosure action was filed.  However, the foreclosure action was later dismissed for want of prosecution, and then…

Feds State They Will Expect ‘Good Faith Efforts to Comply’ With TRID

The federal banking regulators (including the CFPB) confirmed in an Oct. 1 letter that “[e]xaminers will expect supervised entities to make good faith efforts to comply with the [‘Know Before You Owe’ TILA-RESPA Integrated Disclosure] Rule’s requirements in a timely manner.” More specifically, “examiners will consider the institution’s implementation plan, including actions taken to update policies, procedures, and processes; its training of appropriate staff; and its handling of early technical problems or other implementation challenges.” A copy of the letter issued by the Office of the Comptroller of the Currency (OCC) is available here. The CFPB’s related press release is available…

Illinois Court Holds New Mortgagee May Be Substituted After Foreclosure Sale, Indicates Borrower’s Counsel May Be Sanctioned

The Illinois Appellate Court, First District, recently held that a failure to file a motion to substitute plaintiff in a pending foreclosure proceeding prior to the judicial sale did not invalidate the sale. Also, considering the absence of any meaningful argument advanced on appeal, the Court further ordered counsel for defendant to show cause why he should not be sanctioned. A copy of the opinion is available at: Link to Opinion. The mortgagee filed a foreclosure action, and a judgment of foreclosure was ultimately entered. Thereafter, the mortgagee transferred servicing to a new mortgagee. The new mortgagee appeared at the…

Mortgage Servicer Liable for Its Attorney’s Payoff Statement

Earlier this summer we explained here that the Third Circuit’s decision in Kaymark spelled Fair Debt Collection Practices Act trouble for mortgage lenders and servicers who make statements seeking to recover estimated fees and costs. We examined these risks in a recent webinar as well. In Beard v. Ocwen, a federal district court, citing Kaymark, recently held a mortgage servicer liable under the FDCPA for a reinstatement letter made by its foreclosure counsel, which included fees and costs that had not been incurred. Word Placement Matters When Describing ‘Anticipated’ Fees Jaynie Beard defaulted on her mortgage loan. Following the default, the mortgage loan’s…