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Posts published in July 2016

Nevada Fed. Court Denies Class Cert. on ‘Ascertainability’ Grds., Fannie/Freddie Liens Not Extinguished by HOA Foreclosure

The U.S. District Court for the District of Nevada recently confirmed that a homeowner association’s foreclosure of its superpriority lien cannot extinguish a property interest of Fannie Mae or Freddie Mac while those entities are under the Federal Housing Finance Agency’s (FHFA) conservatorship. In so ruling, the Court also denied class certification, holding that the issue of whether Fannie Mae or Freddie Mac held an interest in the property at issue at the time of a homeowner association foreclosure sale presents an impermissible individualized factual inquiry that would require “mini-trials” as to each affected property. A copy of the opinion…

CFPB Issues Outline of Possible Debt Collection Rules

Today the Consumer Financial Protection Bureau released an outline of its proposals for rules under the federal Fair Debt Collection Practices Act. The FDCPA regulates the practices of debt collectors, primarily persons who collect consumer debt on behalf of others and sometimes persons who purchase defaulted consumer debts. The CFPB’s outline displays its intention to issue rules not only covering these third-party debt collectors and debt purchasers, but also to regulate the debt collection activities of original creditors themselves under the Bureau’s authority from the Dodd-Frank Act to issue regulations prohibiting unfair, deceptive, and abusive acts and practices. The outline…

Mass. SJC Holds Recorded Attorney’s Affidavit May Cure Defect in Certificate of Acknowledgment for Mortgage

In response to a request from the U.S. Court of Appeals for the First Circuit, the Supreme Judicial Court of Massachusetts recently held that a recorded attorney’s affidavit attesting to the proper acknowledgment of a recorded mortgage with a Certificate of Acknowledgment that omits the mortgagors’ names, in certain circumstances, may cure the defect in the Acknowledgment. The Court also held that a recorded attorney’s affidavit attesting to the proper acknowledgment of a recorded mortgage with a Certificate of Acknowledgment that omits the mortgagors’ names, in certain circumstances, may provide constructive notice of the existence of the mortgage to a…

Consumer Financial Services Conference Set for Sept. 15-16, Early Registration Ends July 30

July 26, 2016 — The Annual Consumer Financial Services Conference organized by The Conference on Consumer Finance Law will be held Sept. 15-16 at Loyola University Chicago School of Law. The early registration discount ends July 30. The conference will include presentations on the latest developments in consumer financial services law, including mortgage lending and servicing, bankruptcy and debt collection. Several Maurice Wutscher attorneys will speak at the conference. Donald Maurice will discuss attorney ethics and the Fair Debt Collection Practices Act and Eric Rosenkoetter will speak on state regulation of the debt buying industry. Conference attendees will also hear…

Fla. App. Court (4th DCA) Holds HOA Foreclosure Filed After Recording of Mortgagee’s Lis Pendens Not Barred

Distinguishing its prior ruling in U.S. Bank National Ass’n v. Quadomain Condominium Ass’n, the District Court of Appeal of the State of Florida, Fourth District, recently held that a foreclosure of a homeowners association’s lien against the property owner filed after the recording of a lis pendens by a first mortgagee is not barred, where the association’s subordinate lien was imposed under the association’s declaration of covenants recorded before the first mortgagee recorded its lis pendens. In so ruling, the Court confirmed that the homeowners association’s foreclosure action is inferior to the foreclosure of the first mortgage. A copy of…

Calif. App. Court Holds Servicer May Owe Borrower Duty of Care as to Loan Mod Efforts, Loan Owner May Be Liable

The Court of Appeal of the State of California, Sixth Appellate District, recently held that a loan owner may be liable for misrepresentations made by the loan servicer. The Court also held that a loan servicer may owe a duty of care to a borrower through application of the “Biakanja” factors, even though its involvement in the loan does not exceed its conventional role. A copy of the opinion in Daniels v. Select Portfolio Servicing, Inc. is available at:  Link to Opinion. In May 2005, the borrowers obtained an adjustable rate mortgage. In early 2008, the borrowers asked their servicer to…

11th Cir. Holds Procedural Violation of FDCPA Enough for Standing Under Spokeo

In an unpublished opinion, the U.S. Court of Appeals for the Eleventh Circuit recently held that a consumer alleging that she did not receive disclosures required by the federal Fair Debt Collections Practices Act (FDCPA) sufficiently alleged that she suffered a concrete injury, and thus satisfied the standing doctrine’s injury-in-fact requirement under Article III of the U.S. Constitution. In so ruling, the Court confirmed that the FDCPA only applies to debts that are in default when the debt collector obtained them, rejecting the consumer’s argument that “a debt can be in default before the debtor is ever asked to pay…

Illinois App. Court Rules Deficiency Judgment Not To Be Reduced by Profit on Later Private Sale of Collateral

The Appellate Court of Illinois, Second District, recently held that when a mortgagee obtains a deficiency judgment in a foreclosure action, purchases the property at a judicial sale, and then resells it to a third party for an amount that exceeds the price paid at the judicial sale, the debtor is not entitled to a setoff in the mortgagee’s enforcement proceedings to recover the deficiency judgment. A copy of the opinion in Old Second National Bank v. Jafry is available at:  Link to Opinion. In June 2013, the trial court entered a judgment of foreclosure and sale with respect to a…

Fla. App. Court Rules New Foreclosure Plaintiff Following Transfer of Servicing Failed to Prove Standing

The District Court of Appeal of the State of Florida, Fourth District, recently reversed summary judgment in favor of a mortgagee, holding that a genuine issue of material fact as to whether the original plaintiff or the substituted successor in interest held the note when the complaint was filed precluded summary judgment, and thus that the borrower’s lack of standing defense was not refuted. A copy of the opinion in Craven-Lazarus v. Pennymac Holdings, LLC is available at:  Link to Opinion. A mortgagee sued to foreclose its mortgage. The complaint alleged that it was “entitled to enforce the Note as a…

11th Cir. Upholds Denial of Arbitration, Holds Trial Not Required If No Genuine Issue of Material Fact

In a case involving the enforceability of so-called “clickwrap” web-based agreements, the U.S. Court of Appeal for the Eleventh Circuit recently affirmed the denial of a defendant’s motion to compel arbitration, holding that the defendant failed to prove the existence of an agreement to arbitrate. Because the Court found that the defendant offered no competent evidence to demonstrate the existence of a genuine issue of material fact concerning the existence of an arbitration agreement, the debt buyer’s motion to compel arbitration must be denied as a matter of law without the need for a trial. A copy of the opinion…

4th Cir. Holds Late Fees on Scheduled Payments Made Insufficient Due to Prior Late Fees Violates Maryland CLEC

The U.S. Court of Appeals for the Fourth Circuit recently held that a lender’s practice of charging late fees when the amount of the payment was insufficient to cover both the scheduled payment and earlier late fees violated Maryland’s Credit Grantor Closed End Credit Provisions (CLEC). However, the Court also held that the lender’s practice of applying payments first to late charges, then to accrued interest, and then to principal, as well as the lender’s internal accounting practices, did not violate CLEC. A copy of the opinion in Williams v. Lendmark Fin. Serv. is available at:  Link to Opinion. In 2009,…

Ohio Supreme Court Holds Foreclosure Standing Requires Rights to Note, Mortgage, Including Post-Bankruptcy Discharge

The Supreme Court of Ohio recently held that, when debt on promissory note secured by mortgage has been discharged in bankruptcy, the holder of the note may not pursue collection against the maker of note, but the mortgagee has standing to foreclose on the collateral property, and can use the amounts due on the note as evidence to establish that it may collect from the forced sale of the property. The Court also held that, regardless of whether the creditor can obtain a personal judgment on the note against the borrowers, the creditor must still prove that it is the…