The U.S. Court of Appeals for the Fifth Circuit held that a refinance lender is not entitled to contractual subrogation where it does not have a valid deed of trust. Additionally, the Fifth Circuit certified the question of law to the Supreme Court of Texas regarding whether a lender is entitled to equitable subrogation where it failed to correct a curable constitutional defect in the loan documents under § 50 of the Texas Constitution. A copy of the opinion in Zepeda v. Federal Home Loan Mortgage Corp. is available at: Link to Opinion. In 2007, a borrower took out a…
Posts tagged as “Fifth Circuit”
In an agricultural lien contest between three creditors of a bankrupt commercial farm, the U.S. Court of Appeals for the Fifth Circuit recently affirmed the trial court’s award of summary judgment in favor of a bank that provided debtor-in-possession financing, holding that the locale of the farm products determined the applicable lien law and that bank’s lien was superior to the liens of two nurseries that supplied trees and shrubs because the latter were either unperfected or unenforceable. A copy of the opinion in Fishback Nursery, Inc. v. PNC Bank is available at: Link to Opinion. The debtor, “a wholesale…
The U.S. Court of Appeals for the Fifth Circuit recently held that a mortgage servicer only had to comply with the federal Real Estate Settlement Procedure Act (RESPA) requirements regarding loss mitigation applications once when the servicer had already provided the same reasons for the denial of a loan modification in response to a prior loss mitigation application. A copy of the opinion in Germain v. US Bank National Association is available at: Link to Opinion. In 2005, a borrower executed a deed of trust in favor of a lender to refinance his home. In 2012, the servicer began servicing the…
The U.S. Court of Appeals for the Fifth Circuit recently held that Texas law contains no detrimental reliance exception to a lender’s unilateral right to withdraw an acceleration notice. A copy of the opinion in Jatera Corporation v. U.S. Bank National Association is available at: Link to Opinion. A borrower defaulted on a Texas home equity fixed adjustable rate note secured by a Texas home equity security instrument. In 2010, the mortgagee through its then loan servicer sent the borrower notice of its intent to accelerate the note and demanded full payment of the debt. The mortgagee filed suit and…
In a case of first impression, the U.S. Court of Appeals for the Fifth Circuit recently held that a lender was not vicariously liable for a loan servicer’s alleged violation of the federal Real Estate Settlement Procedures Act holding that (a) the borrower failed to plead an agency relationship, “an essential element of a vicarious liability claim; and (b) even if an agency relationship existed, the lender could not be vicariously liable as a matter of law for the servicer’s alleged failure to comply with RESPA. A copy of the opinion in Christiana Trust v. Riddle is available at: Link to Opinion. The borrower took…
The U.S. Court of Appeals for the Fifth Circuit held that ambiguity in the deed of trust regarding the lender’s right to pay real estate taxes and establish an escrow account precluded entry of summary judgment in favor of the loan servicer on the borrower’s breach of contract claim. Additionally, the Court vacated a counterclaim for foreclosure in favor of the loan servicer and remanded the claim for reconsideration, noting that foreclosure would only be available if the servicer could show that it complied with contractual requirements. Finally, the Fifth Circuit affirmed the trial court’s rulings in favor of the…
The U.S. Court of Appeals for the Fifth Circuit recently held that a purported defect in the assignment of a security instrument — that it was executed solely as “nominee,” and not as beneficiary – did not affect the rights of the beneficiary and its successors and assigns to foreclose the subject property, and entered judgment in favor of the mortgagee. A copy of the opinion in Deutsche Bank National Trust Company v. Burke is available at: Link to Opinion. In May 2007, a lender extended a mortgage loan, evidenced by a promissory note executed by the borrower and secured…
The U.S. Court of Appeals for the Fifth Circuit held that a civil investigative demand (CID) issued by the Consumer Financial Protection Bureau did not adequately advise the respondent of the nature of the conduct constituting the alleged violation under investigation and the provision of law applicable to such violation. Accordingly, the Fifth Circuit reversed the ruling of the trial court granting the CFPB’s petition for an order to enforce the CID. A copy of the opinion in Consumer Financial Protection Bureau v. The Source for Public Data, L.P. is available at: Link to Opinion. Under 12 U.S.C. § 5562(c)(1), the…
The U.S. Court of Appeals for the Fifth Circuit recently held that a mortgagee’s foreclosure action did not violate an automatic stay imposed during one of the plaintiff’s chapter 13 bankruptcy schedules, where the debtor failed to amend his bankruptcy schedules to disclose his recent acquisition of the subject property from his son. In so ruling, the Fifth Circuit affirmed the trial court’s judgment in favor of the mortgagee because father and son plaintiffs were judicially estopped from claiming a stay violation. A copy of the opinion in Fornesa v. Fifth Third Mortgage Company is available at: Link to Opinion. A…
In a recently issued unpublished opinion, the U.S. Court of Appeals for the Fifth Circuit rejected the argument of the attorney defendant who owned a law firm and a debt-buying company that he was exempt under the federal Fair Debt Collection Practices Act (FDCPA) because he was a creditor “by proxy.” Specifically, the Fifth Circuit determined that the attorney, his law firm, and his debt-buying company were all distinct entities as a matter of law, such that his argument that he, as the owner of the debt-buying company, owned the debt and thus he did not qualify as a debt…
The U.S. Court of Appeals for the Fifth Circuit held that where a mortgagee rescinded a notice of intent to accelerate and then filed a foreclosure action without first issuing a new notice of intent to accelerate, it failed to meet its burden to show clear and unequivocal notice of intent to accelerate prior to filing suit, and therefore was not entitled to foreclosure judgment. Accordingly, the Fifth Circuit reversed the ruling of the trial court granting summary judgment in favor of the bank, and dismissed the foreclosure action. A copy of the opinion in Wilmington Trust, N.A. v. Angel…
The U.S. Court of Appeals for the Fifth Circuit held that the trial court had jurisdiction to hear a case based on a final foreclosure order entered in Texas state court, and that the borrowers’ due process rights were not violated where the state court entered a foreclosure order without first having a hearing, in violation of the state statute. Because the foreclosure order was valid, the trial court correctly found the foreclosing mortgagee was entitled to quiet title. Accordingly, the Fifth Circuit affirmed the ruling of the trial court entering summary judgment in favor of the defendant mortgagee and against…