The U.S. Court of Appeals for the Third Circuit rejected allegations that two repossession companies violated the federal Fair Debt Collection Practices Act, holding that the companies had a right to repossess a vehicle as collateral for an unpaid loan. A copy of the opinion in Heiko Goldenstein v. Repossessors Inc. is available at: Link to Opinion. In April 2012, the borrower, a resident of Pennsylvania, obtained an online loan in the amount of $1,000 from a consumer lending company. The borrower pledged his car as collateral for the loan. Because the consumer lending company was wholly owned by a Native American tribe and…
The U.S. Court of Appeals for the Eleventh Circuit recently affirmed a district court’s order requiring borrower’s counsel to pay a servicer’s attorney’s fees under Federal Rule of Civil Procedure 11, but reversed that part of the order that imposed sanctions jointly against both borrower and her attorney under the fee-shifting provision of the federal Fair Debt Collection Practices Act, holding only the attorney was liable. A copy of the opinion in Jocelyn Y. Diaz v. The First Marblehead Corporation, et al is available at: Link to Opinion. A student loan borrower in default sued her loan servicer, alleging that the…
In a consolidated multi-district litigation putative class action involving allegations of improper handling of HAMP loan modifications by a large mortgage servicer, the U.S. Court of Appeals for the Ninth Circuit recently affirmed the district court’s order denying the putative class plaintiffs’ motion for class certification, holding that the district court correctly determined that individual issues predominated over common issues. The opinion was not published, and is non-precedential. A copy of the opinion in Hanna Bernard v. CitiMortgage Inc. is available at: Link to Opinion. Among other things, the putative class plaintiffs alleged that the defendant servicer supposedly improperly denied permanent…
The U.S. District Court for the Southern District of Alabama recently granted summary judgment in favor of a mortgage loan servicer and the trustee of a mortgage backed securities trust in a putative class action alleging violations of the federal Fair Debt Collection Practices Act (FDCPA), ruling that the “bona fide error” defense applied to the servicer and that the trustee was not a “debt collector” under the FDCPA. A copy of the opinion in Arnold v. Bayview Loan Servicing, LLC is available at: Link to Opinion. A borrower defaulted on his mortgage loan and filed a petition under Chapter 7 of…
The U.S. Court of Appeals for the Seventh Circuit recently affirmed a district court’s refusal to enjoin a bank’s state court action to collect on a promissory note and related guaranties, holding that the borrower’s appeal was frivolous and that sanctions were appropriate under Federal Rule of Appellate Procedure 38. A copy of the opinion in CFE Group, LLC v. FirstMerit Bank, NA is available at: Link to Opinion. A bank sued a corporate borrower and related parties in federal district court in 2012 to collect on a promissory note and enforce guaranties. The defendants moved to dismiss, arguing that because…
The Supreme Court of Ohio recently held that a mortgage defectively executed but properly recorded still provides constructive notice of its contents. A copy of the opinion in In re Messer is available at: Link to Opinion. The borrowers executed a promissory note and a mortgage. The notary acknowledgment on the mortgage was left blank. The mortgage was recorded with the notary section incomplete. The mortgage was later assigned. The borrowers later initiated a Chapter 13 bankruptcy asking to avoid the mortgage as defectively executed under Ohio Rev. Code § 5301.01. The U.S. Bankruptcy Court for the Southern District of Ohio…
The U.S. Bankruptcy Appellate Panel for the Eighth Circuit recently affirmed an order of the bankruptcy court granting a debtor’s motion to avoid a judgment creditor’s lien on the debtor’s residence held in tenancy by the entirety with his non-debtor spouse, holding because the lien “fixed” under the Bankruptcy Code and thus impaired the debtor’s claimed exemption, it was avoidable. A copy of the opinion in In re: Casey Drew O’Sullivan is available at: Link to Opinion. The debtor and his wife purchased their home in Missouri in 1995, taking title by the entireties. A creditor of the husband obtained a…
The U.S. Court of Appeals for the Eleventh Circuit recently upheld the district court’s dismissal of a borrower’s amended complaint against a loan servicer alleging claims under the Fair Debt Collection Practices Act (FDCPA) and the Florida Consumer Collection Practices Act (FCCPA) for leaving a letter in the borrower’s mailbox, posting a letter to his front door, and sending a letter via registered mail offering the borrower various sums of financial assistance if he vacated the property. The Court held that the servicer’s actions did not constitute a demand for payment under the FDCPA and FCCPA and upheld the district…
The U.S. Court of Appeals for the Eleventh Circuit recently upheld the dismissal of federal Truth in Lending Act (TILA) allegations that sought to hold the assignee of a mortgage loan liable for the mortgage loan servicer’s supposed failure to comply with the borrower’s written request for a payoff statement. In so ruling, the Court held that TILA creates a cause of action against an assignee where violation is “apparent on the face of the disclosure statement provided in connection with [a mortgage loan] transaction pursuant to this subchapter,” and that an alleged failure to provide a payoff statement is…
The U.S. District Court for the District of Arizona recently held that a debt collector did not violate the federal Fair Debt Collection Practices Act (FDCPA) by attempting to collect on a debt because a debtor’s spouse’s bankruptcy proceedings did not discharge the debt to the extent that the debtor himself may be liable for it. A copy of the opinion in Parker v. First Step Group of Minnesota LLC is available at: Link to Opinion. The debt at issue arose prior to June 2010, and both the debtor and his wife were liable on the debt. In June 2010, the…
The District Court of Appeal of the State of Florida, Fifth District, recently reversed an involuntary dismissal of a mortgage foreclosure action, holding that the trial court erroneously ruled that the mortgagee failed to comply with the mortgage’s pre-foreclosure notice requirements, and erroneously excluded from evidence the prior loan servicer’s business records. A copy of the opinion in The Bank of New York v. Johnson is available at: Link to Opinion. A borrower defaulted on her mortgage and the mortgagee sued to foreclose. The foreclosure action proceeded to a non-jury trial, at which an employee of the mortgage servicer testified about the process…
The U.S. Court of Appeals for the Ninth Circuit recently affirmed the dismissal of a federal False Claims Act (FCA), 31 U.S.C. §§3729-3733, lawsuit brought by private citizen plaintiffs against various mortgage lenders and servicers for supposedly making false certifications regarding loans sold to Fannie Mae and Freddie Mac. In so ruling, the Court held that Fannie Mae and Freddie Mac were not federal instrumentalities for purposes of the FCA, 31 U.S.C. § 3729(b)(2)(A)(i). A copy of the opinion in U.S. ex rel. Adams et al. v. Aurora Loan Services Inc. et al. is available at: Link to Opinion. The plaintiff…