The U.S. Bankruptcy Court for the Southern District of Florida recently denied a creditor’s motion to compel the debtor to surrender mortgaged property and also denied the debtor’s motion to stay the case, holding that a chapter 7 debtor who indicates surrender of real property in his statement of intention is not obligated to surrender that property to the lienholder, whether or not the property is administered by the chapter 7 trustee. Disagreeing with other judges in the same district and elsewhere on this issue, the bankruptcy judge held that “[c]ompulsory surrender of real property collateral by a debtor to…
Posts published in June 2016
The Third District Court of Appeal, State of Florida, recently reversed and remanded a trial court’s order incorrectly setting the amount required to redeem a mortgage loan, and held that the trial court must conduct an evidentiary hearing to determine the amount needed to redeem the mortgage loan because the redemption amount was unliquidated. A copy of the opinion in Wells Fargo Bank v. Sawh, et al. is available at: Link to Opinion. A mortgagee sued to foreclose its mortgage in October 2013. The complaint alleged that the borrower owed “principal in the amount of $3,331,190.81 … as well as … interest,…
The U.S. Court of Appeals for the Seventh Circuit recently held that neither extrinsic evidence of confusion, nor materiality, is required for claims under § 1692g(a) of the federal Fair Debt Collection Practices Act (FDCPA). The Court also held that a company that is itself a debt collector may be liable for the violations of the FDCPA by its debt collector agent. A copy of the opinion in Janetos v. Fulton Friedman & Gullace, LLP is available at: Link to Opinion. The defendant creditor allegedly acquired defaulted consumer debts owned by the plaintiffs and did not dispute that it was a debt…
The U.S. Court of Appeals for the Eighth Circuit recently held that a bank was entitled to recover its cybertheft losses under its financial institution bond, despite its employee’s violation of the bank’s internal policies and procedures, and despite the bank’s failure to update its antivirus software, holding that Minnesota’s “concurrent causation” doctrine applies to financial institution bonds. A copy of the opinion in State Bank of Bellingham v. BancInsure, Inc. is available at: Link to Opinion. A computer at the plaintiff bank became infected with malware, which allowed a criminal third party to transfer nearly half a million dollars to…
The Supreme Court of Michigan recently held that the full credit bid rule did not bar contract claims brought by a mortgagee against non-borrower third parties. The Michigan Supreme Court also held that the closing instructions at issue constituted a contract upon which a breach of contract claim could be brought. A copy of the opinion in Bank of America, NA v. First American Title Insurance Co. is available at: Link to Opinion. The plaintiff lender partially financed four properties and shortly after closing, all four borrowers defaulted. The lender foreclosed by advertisement and subsequently bought all four properties at sheriff’s…
The U.S. Court of Appeals for the Seventh Circuit recently held that the federal Fair Debt Collection Practices Act (FDCPA) does not prohibit debt collectors from filing a collection lawsuit without intending to proceed to trial to obtain a judgment. A copy of the opinion in St. John v. Cach, LLC is available at: Link to Opinion. The defendant debt collectors filed suit in state court to recover on the plaintiffs’ delinquent credit card accounts. When the debtors contested the collection lawsuits, the debt collectors moved to voluntarily dismiss the actions with prejudice. The plaintiff debtors then sued the debt collectors…
The U.S. Court of Appeals for the Eighth Circuit recently held that two borrowers did not have standing to challenge an allegedly invalid mortgage assignment between creditors, because the borrowers could not show harm fairly traceable to the allegedly invalid assignment. Additionally, the Court held that the borrowers failed to state a plausible claim for relief for allegedly failing to comply with the notice of intent to accelerate provisions in their mortgage. A copy of the opinion in Brown v. Green Tree Servicing LLC is available at: Link to Opinion. The plaintiff borrowers alleged that their mortgage loan servicer did not…
The District Court of Appeal of the State of Florida, Fourth District, recently reversed a final judgment of foreclosure, holding that the mortgagee failed to prove that it had standing to foreclose because the note was specially indorsed to an affiliate of the lender, which later merged into the lender, but only the lender and not its former affiliate subsequently indorsed the note to the mortgagee, and the mortgagee did not present evidence of the extent of any assets transferred as part of the merger. A copy of the opinion in Abraham Segall v. Wachovia Bank is available at: Link to Opinion. The…
The U.S. Court of Appeals for the Eleventh Circuit recently affirmed summary judgment in favor of a mortgage loan servicer, holding that the trial court correctly refused to enforce the servicer’s acceptance of a short sale offer that contained an obvious clerical error in the form of a “bargain basement price.” A copy of the opinion in Patterson v. CitiMortgage, Inc. is available at: Link to Opinion. A borrower defaulted on a $550,000 mortgage loan in 2008 and wanted to sell his house to a third party through a short sale. The servicer made clear in the short sale payoff letter that…
The U.S. Court of Appeals for the Fifth Circuit recently held that a transfer of a tax lien to a tax buyer under Texas law does not constitute an extension of credit that is subject to the federal Truth in Lending Act (TILA). A copy of the opinion in Billings v. Propel Financial Services, LLC is available at: Link to Opinion. In four consolidated cases, the plaintiffs were individuals who agreed to have the defendant property tax buyers pay their real estate taxes in exchange for the transfer of their tax liens pursuant to Sections 32.06 and 32.065 of the Texas…
The U.S. Court of Appeals for the Fifth Circuit recently held that, although a bank had actual notice of an heir’s claim to her decedent father’s account funds, the bank’s compliance with the post-death affidavit provisions of California Probate § 13106(a) rendered the bank immune from liability for wrongful disbursement of the funds. In any event, the Court also held, the decedent’s surviving spouse who withdrew the funds had a probate claim that was statutorily superior to the heir’s claim. A copy of the opinion in Angelo v. Wells Fargo Bank is available at: Link to Opinion. Plaintiff heir’s father died…