The U.S. Court of Appeals for the Ninth Circuit recently held that for cram-down valuations, 11 U.S.C. § 506(a)(1) requires the use of “replacement value” based upon the adoption of the replacement value standard in Associates Commercial Corp. v. Rash, 520 U.S. 953, 956 (1997). In so ruling, the Ninth Circuit interpreted Rash to instruct that valuation of collateral in a cram down must be based on the debtor’s desires (i.e., the proposed use of the collateral in the debtor’s plan of reorganization), and without consideration of the value that the secured creditor would realize in an immediate sale. Accordingly,…
Posts tagged as “Foreclosure”
The Bankruptcy Appellate Panel of the U.S. Court of Appeals for the Ninth Circuit recently affirmed the dismissal of an adversary proceeding without leave to amend, holding that: (a) the debtors failed to state a claim for wrongful foreclosure under California law; (b) the debtors failed to state a claim for breach of contract or breach of the implied covenant of good faith and fair dealing because they were not third-party beneficiaries of the pooling and servicing agreement; (c) the debtors failed to state a claim for breach of the deed of trust or breach of the implied covenant of…
The Court of Special Appeals of Maryland, the intermediate appellate court in that state, recently held that a party who authorizes a foreclosure trustee to initiate a foreclosure action on a deed of trust must be licensed as a collection agency in the state before filing the foreclosure lawsuit, and that this licensing requirement applies to trusts formed outside of the State of Maryland. A copy of the opinion in Blackstone v. Sharma is available at: Link to Opinion. A statutory trust formed in Delaware filed two foreclosure lawsuits against homeowners in Maryland through a substitute trustee. The trust through…
The Appellate Court of Illinois, First District, recently ruled that the mortgagee of a reverse mortgage loan held an interest in the secured property to the extent that the borrower inherited an interest in the property following the non-borrower’s spouse’s intestate death. Accordingly, the Court reversed the trial court’s dismissal of the reverse mortgagee’s foreclosure complaint and remanded the matter for further determination of the borrower’s inherited interest in the subject property. A copy of the opinion in Reverse Mortgage Solutions, Inc. v. Rahman is available at: Link to Opinion. The borrower and his spouse purchased the subject property as…
The U.S. Court of Appeals for the Ninth Circuit recently amended its opinion in Ho v. ReconTrust Co., maintaining and affirming its prior ruling that the trustee in a California non-judicial foreclosure did not qualify as a debt collector under the federal Fair Debt Collection Practices Act (FDCPA). The amendments to the prior ruling among other things add that a California mortgage foreclosure trustee meets the FDCPA’s exclusion from the term “debt collector” for entities whose activities are “incidental to … a bona fide escrow arrangement” at 15 U.S.C. § 1692a(6)(F). The Ninth Circuit also removed its prior discussion of…
The County Court of the Nineteenth Judicial Circuit in and for St. Lucie County, Florida recently dismissed a borrower’s amended complaint against a mortgage servicer alleging violations of the Florida Consumer Collection Practices Act (FCCPA) for sending mortgage statements to the borrower following involuntary dismissal, without prejudice, of a foreclosure action. In dismissing the action with prejudice, the Court held that the statements sent by the defendant mortgage servicer were not attempts to collect a debt, and therefore not actionable under the FCCPA. In addition, the Court held that the plaintiff borrower failed to state a cause of action because…
The U.S. Bankruptcy Court for the Middle District of Alabama recently held that a mortgage servicer did not violate the discharge injunction in 11 U.S.C. § 524 by sending the discharged borrowers monthly mortgage statements, delinquency notices, notices concerning hazard insurance, and a notice of intent to foreclose. Moreover, because the borrowers based their claims for violation of the federal Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq., on the violation of the discharge injunction, the Court also dismissed their FDCPA claims with prejudice. A copy of the opinion in Golden et al v. Carrington Mortgage Services,…
The U.S. Court of Appeals for the Ninth Circuit recently affirmed the Bankruptcy Appellate Panel’s determination that a creditor’s pre-bankruptcy, non-recourse lien on two debtors’ real property is extinguished following a non-judicial foreclosure sale. A copy of the opinion in In re: Salamon is available at: Link to Opinion. In April 2009, two debtors purchased real property. Rather than fund the purchase price and pay off the two existing liens on the real property, the debtors executed a wrap-around mortgage in favor of the property seller. The debtors then funded the balance of the purchase price with a note secured…
The Appellate Court of Illinois, First District, recently held that an allonge was “affixed” to a note for purposes of the Illinois Uniform Commercial Code (UCC) when it was attached via paper clip. A copy of the opinion in Olive Portfolio Alpha, LLC v. 116 West Hubbard Street, LLC is available at: Link to Opinion. The plaintiff note owner (“assignee”) filed a mortgage foreclosure action against the defendant borrower seeking the foreclosure of a commercial property. The borrower filed a motion to dismiss for alleged lack of standing. The motion was denied in part and granted in part “as to…
The District Court of Appeal of Florida for the Fourth District recently denied a borrower’s motion for appellate attorney’s fees in a contested foreclosure, holding that the reciprocity provision of section 57.105(7), Florida Statutes, does not apply where the borrower prevails based on lack of standing, unless the plaintiff mortgagee was also the original lender. A copy of the opinion in Nationstar Mortgage LLC, etc. v. Marie Ann Glass, et al. is available at: Link to Opinion. The trial court dismissed with prejudice a mortgagee’s amended foreclosure complaint, and the plaintiff mortgagee appealed. The mortgagee voluntarily dismissed the appeal, and…
The U.S. Court of Appeals for the Second Circuit recently reinstated a complaint alleging a debt collector violated the federal Fair Debt Collection Practices Act when it sent a payoff statement containing unaccrued fees and costs without providing any information as to how those fees were calculated or any basis for those fees and costs. In so ruling, the Second Circuit was careful to note that a payoff statement may contain estimated fees and costs if the information in the statement would allow the least sophisticated consumer to determine the minimum amount she owed at the time of the notice,…
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…