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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…

Mass. Federal Court Imposes FCRA Preemption on State Law Claims

The United States District Court for the District of Massachusetts recently held that the federal Fair Credit Reporting Act (FCRA) preempts Massachusetts state law claims for violations of the Massachusetts Credit Reporting Act, Mass. Gen. Laws ch. 93, § 54A, and the Massachusetts Consumer Protection Act, Mass. Gen. Laws ch. 93A. The decision also held that the mere furnishing of information following a bankruptcy discharge, without more, is not actionable. A copy of the opinion is available at: Link to Opinion. The decision adds to a growing split among federal courts on both issues. Credit Reporting a Loan Modification and…

7th Cir. Confirms FDCPA Is Not Enforcement Mechanism for Matters Governed by Other Federal or State Laws

The U.S. Court of Appeals for the Seventh Circuit recently affirmed summary judgment in favor of a debt collector, holding among other things that the “FDCPA is not an enforcement mechanism for matters governed elsewhere by state and federal law.” A copy of the opinion is available at:  Link to Opinion. The plaintiff failed to pay his credit card and a law firm specializing in debt collection sued to collect the balance in state court. In response to the creditor’s motion for summary judgment, the card holder invoked the arbitration provision in the credit card agreement. The state court denied…

Illinois Appellate Court Allows Use of Prior Servicer’s Records to Prove Amounts Due in Foreclosure

The Illinois Appellate Court, Third District, recently affirmed a grant of summary judgment to a mortgagee over the borrowers’ standing and hearsay challenges. In so ruling, the Appellate Court held that:  (1) the mortgagee’s failure to attach a copy of the note with the indorsement in blank to the complaint did not deprive it of standing; and  (2) an affidavit by an employee of the current holder of the debt was admissible in a foreclosure proceeding even though some of the business records were created by a prior entity. A copy of the opinion is available at: Link to Opinion.…

Florida Appellate Court Confirms Mortgagee Need Only Prove FMV to Obtain Foreclosure Deficiency Judgment

The District Court of Appeal of Florida, Fifth District, recently reversed the denial of a motion for deficiency judgment in a foreclosure action, holding that the trial court erroneously required the mortgagee to introduce into evidence the final judgment of foreclosure previously entered in the same case to demonstrate the amount of debt owed. A copy of the opinion is available at:  Link to Opinion. The trial court granted summary judgment of foreclosure in favor of the mortgagee, specifically reserving jurisdiction to enter further orders, including deficiency judgments.  The borrower did not appeal the judgment of foreclosure. The mortgagee then…

SD Fla. Provides Mixed Ruling on RESPA RFI Responses, Property Inspection Fees Assessed Post-Default

The U.S. District Court for the Southern District of Florida recently dismissed with prejudice a borrowers’ allegations that a loan servicer’s response to their request for information regarding drive-by property inspections violated the federal Real Estate Settlement Procedures Act (RESPA), and dismissed the remaining state-law allegations that the drive-by inspections violated the Florida Consumer Collection Practices Act (FCCPA) for lack of subject matter jurisdiction. A copy of the opinion is available here: Link to Opinion. The borrowers defaulted on their home mortgage loan.  The loan servicer began conducting drive-by inspections pursuant to the mortgage. The borrowers sent a letter to the…

7th Cir. Holds Servicer/Mortgagee Does Not Owe Fiduciary Duty to Borrower as to Hazard Insurance Proceeds

The U.S. Court of Appeals for the Seventh Circuit recently affirmed a district court’s judgment that a lender did not owe the borrower a fiduciary duty to use the payout from a homeowners’ insurance policy to pay down the loan instead of repair the house, but reversed the dismissal of the borrower’s breach of contract claim. A copy of the opinion is available at:  Link to Opinion. The borrower purchased his home in 2005 with a $100,500 mortgage loan. The home was seriously damaged by a fire five years later. The borrower filed an insurance claim, and the insurer paid…