The Appellate Court of Illinois, Second District, recently held that a mortgagee with a foreclosure judgment could not collect on the deficiency against rents from other properties owned by the mortgagor, because the mortgagee’s foreclosure judgment was not superior to the prior recorded mortgages for the other properties which contained assignment-of-rent clauses, and the other mortgagees had executed forbearance agreements to enforce those assignment-of-rents clauses. A copy of the opinion in BMO Harris Bank N.A. v. Joe Contarino, Inc. is available at: Link to Opinion. In 2013, a bank, acting as the assignee of the FDIC, foreclosed on four mortgages…
Posts published in April 2017
The U.S. Court of Appeals for the Ninth Circuit recently reversed the dismissal of a Fair Debt Collection Practices Act claim arising out of a non-judicial foreclosure. The Ninth Circuit ruled that section 1692f(6) of the FDCPA applies to non-judicial foreclosure activity. A copy of the opinion in Dale Dowers v. Nationstar Mortgage, LLC is available at: Link to Opinion. Two borrowers refinanced a loan secured by their home and executed a note and deed of trust. The lender assigned the note to a purchaser of the subject loan (the “loan owner”). Later, the lender assigned the deed of trust…
The U.S. Court of Appeals for the Fifth Circuit recently held that no statute of limitations applies to a mortgage loan borrower’s claims of violations of the requirements for home equity loans contained in section 50(a)(6) of the Texas Constitution. In so ruling, the Court recognized and applied the Texas Supreme Court’s recent ruling in Wood v. HSBC Bank USA, N.A., 505 S.W.3d 542 (2016), which reached the same conclusion, and held that the borrower did not waive the issues in Wood for purposes of the appeal. A link to the opinion in Ocwen Loan Servicing, LLC v. Berry is…
Indiana Supreme Court Rejects Borrowers’ Argument Bankruptcy Discharge Wiped Out Mortgage Loan, Lien
Indiana Supreme Court Rejects Borrowers’ Argument Bankruptcy Discharge Wiped Out Mortgage Loan, Lien
The Supreme Court of Indiana recently confirmed a mortgagee’s ability to seek an in rem judgment against property for which there was an outstanding lien balance after the borrowers obtained a discharge of their Chapter 7 bankruptcy. In so ruling, the Court distinguished the difference between an in rem and in personam judgment, and rejected the borrowers’ unsupported argument that the debt was paid in full by the time the mortgagee initiated foreclosure proceedings against the borrowers. A copy of the opinion in McCullough v. CitiMortgage, Inc. is available at: Link to Opinion. The borrowers obtained a loan from the…
The U.S. Court of Appeals for the Seventh Circuit recently affirmed the dismissal of a borrower’s lawsuit against his mortgagee, its former employees, counsel and appellate counsel, and the original mortgagee’s software platform creator, under various federal and state consumer protection statutes and common law torts. In so ruling, and despite the borrower’s assertion that new and previously unknown claims were being asserted, the Court held that all causes of action brought by the borrower in the federal action were necessarily adjudicated in a prior state court foreclosure action and barred by the Rooker-Feldman doctrine. A copy of the opinion…
Reversing a trial court’s ruling in favor of a condominium association and against a mortgagee, the Appellate Court of Illinois, First District, recently held that the Illinois Condominium Property Act’s (“Condo Act”) provision creating a mechanism to extinguish liens for pre-foreclosure common expense assessments does not create a timing requirement as to when common expense assessments must be paid post-foreclosure to confirm extinguishment of the pre-foreclosure lien. A copy of the opinion in 5510 Sheridan Road Condominium Association v. U.S. Bank is available at: Link to Opinion. A condominium association (“COA”) filed a lawsuit against a mortgagee seeking possession of…
The U.S. Court of Appeals for the Fifth Circuit recently held that the collection of garnished wages earned during the 90 days prior to the filing of a bankruptcy petition is an avoidable transfer, even if the garnishment was served before the 90-day preference period. The ruling creates a potential split with the Second, Seventh, and Eleventh Circuits, with the Fifth Circuit joining with the Sixth Circuit on the issue. A copy of the opinion in Tower Credit v. Schott is available at: Link to Opinion. A creditor obtained a money judgment in state court against the debtor and served…
The U.S. District Court for the Middle District of Tennessee recently held that a creditor complied with the federal Electronic Funds Transfer Act when it obtained verbal authorization to accept the consumer’s electronic fund transfer and request for enrollment into an autopay system. In so ruling, the Court held that the creditor was not required to send the consumer a copy of his electronic signature (the recording). Instead, the Court held, the written confirmation of enrollment need only include the material terms of the autopay system, and sending the confirmation of enrollment within two business days of the date of…
The U.S. Court of Appeals for the Seventh Circuit recently reversed a trial court’s grant of class certification and remanded the case with instructions to dismiss the case with prejudice because the plaintiffs lacked standing to sue, having shown no injury in fact as required under Spokeo, Inc. v. Robins. A copy of the opinion Eike v. Allergan, Inc. is available at: Link to Opinion. A consumer plaintiff filed a putative class action against six pharmaceutical companies that manufacture eye drops to treat glaucoma. The complaint alleged that they violated the Illinois Consumer Fraud and Deceptive Business Practices Act and…
In an action brought by the Indiana Attorney General against a Florida-based foreclosure defense law firm and its owner-officer, the Supreme Court of Indiana recently held that none of the defendants were expressly or impliedly exempt from liability under four Indiana state consumer protection statutes. A copy of the opinion in Consumer Attorney Services, PA v. State, Ind is available at: Link to Opinion. A foreclosure defense law firm incorporated in Florida and its owner-officer subcontracted with at least five Indiana attorneys to provide local services through “of Counsel,” “associate,” and/or “Partnership” agreements with the law firm — prior to…