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…
Posts tagged as “Mortgage Law”
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 U.S. Court of Appeals for the Eleventh Circuit recently affirmed the dismissal of a mortgage loan borrower’s federal Fair Debt Collection Practices Act and related state law claims because the defendant mortgagee was not a “debt collector” as defined by the FDCPA. In so ruling, the Court also rejected the borrower’s allegations that the monthly statements the mortgagee sent to the borrower after her bankruptcy discharge were impermissible implied assertions of a right to collect against her personally. A copy of the opinion in Helman v. Bank of America is available at: Link to Opinion. The borrower obtained a…
The Appellate Court of Illinois, Third District, recently affirmed a trial court’s dismissal of a qui tam action brought by a private attorney under the Illinois False Claims Act against Mortgage Electronic Registration Systems, Inc. (MERS), holding that the State can file a motion to dismiss at any time during the case even if the State declined to take over the action. A copy of the opinion in State ex rel. Saporta v. Mortgage Electronic Registration Systems, Inc. is available at: Link to Opinion. The plaintiff, the State ex rel. by a private attorney (“Relator”), filed a qui tam action…
The U.S. Court of Appeals for the Ninth Circuit recently reversed a ruling that disallowed an unsecured creditor’s claim filed in a California bankruptcy court based on the forum state’s statute of limitations. In so ruling, the Ninth Circuit held that, although courts typically apply the forum state’s statute of limitations if the contract is silent on the issue, exceptional circumstances warranted the application of a longer statute of limitations here, because the creditor had no option but to enforce its claim in the forum based on where the bankruptcy petition was filed. A copy of the opinion in PNC…
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…
Indiana Supreme Court Rejects Borrowers’ Argument Bankruptcy Discharge Wiped Out Mortgage Loan, Lien
Indiana Supreme Court Rejects Borrowers’ Argument Bankruptcy Discharge Wiped Out Mortgage Loan, Lien
The Supreme Court of Indiana recently confirmed a mortgagee’s ability to seek an in rem judgment against property for which there was an outstanding lien balance after the borrowers obtained a discharge of their Chapter 7 bankruptcy. In so ruling, the Court distinguished the difference between an in rem and in personam judgment, and rejected the borrowers’ unsupported argument that the debt was paid in full by the time the mortgagee initiated foreclosure proceedings against the borrowers. A copy of the opinion in McCullough v. CitiMortgage, Inc. is available at: Link to Opinion. The borrowers obtained a loan from the…
The District Court of Appeal of the State of Florida, Second District, recently reversed a summary judgment award in favor of the borrowers in a foreclosure action, finding a triable issue of material fact existed concerning whether the face-to-face counseling requirements of 24 C.F.R. § 203.604 applied, as the mortgagee did not submit evidence “as to whether the mortgagee and loan servicer had a branch office within 200 miles of the property during the time period before three full monthly installments due on the mortgage went unpaid.” A copy of the opinion in ARC HUD I, LLC v. Ebbert is…
The U.S. Court of Appeals for the Fifth Circuit recently held that a group of plaintiffs plausibly alleged claims for violations of the federal Equal Credit Opportunity Act by asserting that a mortgage lender refused to consider their Section 8 income in assessing their creditworthiness as mortgage applicants, and that they received mortgage loans on less favorable terms and in lesser amounts than they would have had their Section 8 income been considered. Additionally, the Fifth Circuit held that the ECOA does not encompass mortgage purchasers and investors who do not participate in the extension of mortgage loans, even when…
The U.S. Court of Appeals for the Eighth Circuit recently affirmed a district court’s approval of a proposed class settlement in an action arising from a mortgage loan servicer’s practice of automatically ordering and charging for drive-by property inspections on delinquent borrowers, holding that the district court did not abuse its discretion. In so ruling, the Court also affirmed the trial court’s denial of a borrower’s motion to join a trespass claim to the putative class action. A copy of the opinion in Kenneth Njema v. Wells Fargo Bank, N.A. is available at: Link to Opinion. In 2008, four borrowers…
The U.S. Court of Appeals for the Fourth Circuit recently held that “escrow funds, insurance proceeds, or miscellaneous proceeds” are protected by the anti-modification provisions for Chapter 13 bankruptcies as “incidental property” under the definition of “debtor’s principal residence” in the federal Bankruptcy Code. A copy of the opinion in In re Birmingham is available at: Link to Opinion. A debtor filed a voluntary petition for Chapter 13 bankruptcy. One of the claims against the debtor was a mortgage loan secured by a deed of trust on the debtor’s primary residence. When the debtor filed his original Chapter 13 bankruptcy…
The U.S. Court of Appeals for the First Circuit recently rejected a bankruptcy trustee’s effort to avoid a mortgage on the basis that the acknowledgment signed by the borrowers’ attorney-in-fact was defective under Massachusetts law, holding that the acknowledgment was not materially defective because as a matter of agency law the attorney-in-fact’s signature was the borrowers’ “free act and deed.” A copy of the opinion in HSBC Bank USA, N.A. v. Lassman is available at: Link to Opinion. The borrowers purchased a parcel of “registered land” in 1994 in North Attleboro, Mass. (the “subject property”). “Registered land” is real property…