Justia Banking Opinion Summaries

The case involves a group of plaintiffs who claimed that the defendant, Bank of America, fraudulently denied them mortgage modifications under the Home Affordable Modification Program (HAMP) and then foreclosed on their homes. The plaintiffs filed their complaint in May 2018 and their amended complaint in March 2019, alleging claims based on common law fraud, fraudulent concealment, intentional misrepresentation, promissory estoppel, conversion, unjust enrichment, unfair and deceptive trade practices, and, in the alternative, negligence.However, the Supreme Court of North Carolina found that the plaintiffs' claims were time-barred by the applicable statutes of limitations. The court held that the statutes of limitations for all of plaintiffs’ claims, except for their unfair and deceptive trade practices claim, started to run at the latest by the date that each plaintiff lost his or her home. Each plaintiff lost his or her home sometime between April 2011 and January 2014. Thus, the latest point in time any plaintiff could have filed a complaint was January 2017, or in the case of an unfair and deceptive trade practices claim, January 2018. Plaintiffs did not file their original complaint until May 2018. Therefore, their claims are time-barred.The court also rejected the plaintiffs' argument that the discovery rule tolled the statute of limitations for their fraud claims beyond the dates of their foreclosures. The court found that the plaintiffs were on notice of the defendant's alleged fraud by the time they lost their homes, and they should have investigated further. The court therefore reversed the decision of the Court of Appeals and affirmed the trial court's dismissal of the plaintiffs' complaint. View "Taylor v. Bank of America, N.A" on Justia Law

The U.S. Court of Appeals for the Third Circuit ruled on a case involving the Consumer Financial Protection Bureau (CFPB) and a group of trusts associated with the National Collegiate Student Loan Trust. The central questions in the case were whether the trusts were "covered persons" under the Consumer Financial Protection Act (CFPA), and whether the CFPB was required to ratify the underlying action.The CFPB had initiated enforcement proceedings against the trusts for alleged violations related to servicing and collecting student loans, which the trusts had contracted out to third parties. The trusts argued that they were not "covered persons" under the CFPA and that the CFPB's action was untimely because it was initiated when the CFPB director was unconstitutionally insulated from presidential removal and ratified after the statute of limitations had expired.The Third Circuit held that the trusts were indeed "covered persons" under the CFPA because they were engaged in offering or providing a consumer financial product or service. The court also held that the CFPB was not required to ratify the action before the statute of limitations had run, following the Supreme Court's decision in Collins v. Yellen. The court concluded that there was no indication that the unconstitutional limitation on the President's authority to remove the CFPB Director harmed the Trusts, and thus no need for ratification. Therefore, the case was affirmed and remanded to the lower court for further proceedings with these determinations in mind. View "Consumer Financial Protection Bureau v. National Collegiate Master Student Loan Trust" on Justia Law

The Maine Supreme Judicial Court addressed an appeal from Citibank, N.A., challenging a District Court judgment in favor of the defendant, Ashley Moser, in a case related to the collection of credit card debt. The bank argued that the judgment violated its procedural due process rights due to insufficient notice about a hearing scheduled on April 12, 2023.The court had issued notices for both a 'first mediation' and a 'debt collection hearing' on the same day, at the same time, and in the same room. On the hearing day, Citibank's counsel attended without a representative from the bank, assuming that the case was scheduled for mediation and not a final hearing. The court proceeded with the hearing and entered a judgment in favor of Moser, as Citibank failed to satisfy its burden of proof.Citibank appealed, claiming the notices were ambiguous and violated its right to procedural due process. The Supreme Judicial Court agreed with Citibank, noting that the competing notices created an impossibility of both a mediation and a hearing taking place simultaneously. It ruled that the ambiguity in the notices and the court's subsequent judgment denied Citibank the required notice and meaningful opportunity to be heard. The court vacated the judgment and remanded the case for further proceedings. View "Citibank, N.A. v. Moser" on Justia Law

In this case, Michael Bordick and Monica Bordick defaulted on a loan from Franklin Savings Bank, which was secured with a hunting cabin they owned on property they leased. The Bank filed a complaint for recovery of the cabin, and the Business and Consumer Docket ruled in favor of the Bank. The Bordicks appealed, arguing that the Bank did not make disclosures required by the Federal Truth in Lending Act (TILA). The Bank argued that the credit transaction was not subject to TILA.The Maine Supreme Judicial Court held that a credit transaction secured by real property in the form of a lease is not exempt from TILA under 15 U.S.C.A. § 1603(3). However, the court also found that the lower court applied an incorrect test to determine whether the loan was for commercial purposes and therefore exempt under § 1603(1). The court vacated the judgment in favor of the Bank and remanded the case for the lower court to determine the nature of the loan, looking at the totality of the circumstances.The court also clarified that although the leased land where the cabin was located was not the Bordicks' principal dwelling, the credit transaction is not exempt from TILA under § 1603(3) because it was secured with real property. View "Franklin Savings Bank v. Bordick" on Justia Law

In the state of California, an individual named Chad Grayot purchased a used vehicle from a car dealership with a contract that was later assigned to the Bank of Stockton. This contract included the Federal Trade Commission's 'Holder Rule' notice, which allows a consumer to assert against third party creditors all claims and defenses that could be asserted against the seller of a good or service. Grayot sought to hold the Bank responsible for refunding the money he paid under the contract based on the holder provision in the contract. The Bank argued that it could not be held responsible because it was no longer the holder of the contract as it had reassigned the contract back to the dealership. The trial court granted summary judgment in favor of the Bank, accepting its argument. Grayot appealed this decision.The Court of Appeal of the State of California Third Appellate District reversed the trial court's decision. The appellate court held that a creditor cannot avoid potential liability for claims that arose when it was the holder of the contract by later reassigning the contract. This interpretation of the Holder Rule is in line with the Federal Trade Commission's intent to reallocate any costs of seller misconduct to the creditor. The court sent the case back to the lower court for further proceedings consistent with its opinion. View "Grayot v. Bank of Stockton" on Justia Law

Frazier obtained a home mortgage loan for which Dovenmuehle served as sub-servicer. Beginning in October 2015, Frazier failed to make her monthly payments. Frazier successfully negotiated and settled her debt through a short sale of her home, which closed in January 2016. Frazier was later denied a new mortgage loan because her Equifax credit report reflected late payments on her previous mortgage in months following the short sale. She disputed the information to several credit reporting agencies. To confirm the accuracy of its records, Equifax sent Dovenmuehle four Automated Consumer Dispute Verification forms in 2019-2020. Frazier contends the amended codes Dovenmuehle gave Equifax for Pay Rate and Account History were inaccurate, pointing to how Equifax interpreted and reported the amended data in her credit reports.Frazier sued under the Fair Credit Reporting Act, 15 U.S.C. 1681, claiming that Dovenmuehle failed to conduct a reasonable investigation of disputed data and provided false and misleading information to credit reporting agencies. She relied on evidence about persisting inaccuracies in Equifax’s credit reports produced using the amended data. The district court granted Dovenmuehle summary judgment. The Seventh Circuit affirmed. Given the full record, no reasonable jury could find that Dovenmuehle provided patently incorrect or materially misleading information. View "Frazier v. Dovenmuehle Mortgage, Inc." on Justia Law

After the bankruptcy court allowed Chapter 12 debtors – several years in a row – to modify their confirmed plan over the objection of their primary secured creditor, that creditor appealed. The issues are whether the bankruptcy court abused its discretion by confirming the debtors’ fourth modified plan under 11 U.S.C. Section 1229 without requiring the debtors to show an “unanticipated and substantial change in circumstances” and whether, under whatever standard applicable to plan modifications, the court’s factual findings were clearly erroneous.   The Eighth Circuit affirmed. The court held that, at a minimum, a substantial change in circumstances is required to justify modification of a plan under Section 1229. The bankruptcy court’s alternate ruling that the debtors met their burden of showing an unanticipated, substantial change in circumstances is not clearly erroneous, nor is the bankruptcy court’s finding that the fourth modified plan was feasible and confirmable. View "Farm Credit Services v. Steven L. Swackhammer" on Justia Law

Weichsel's Chase credit card member agreement discloses an “Annual Membership Fee” to be added to his billing statement and that Weichsel may request an additional card for an authorized user. A “Rates and Fees Table” discloses the annual membership fee as $450 plus $75 for each additional card. Weichsel included one additional user. Weichsel alleges that his December 2019 billing statement included a renewal notice, stating that Weichsel’s annual $525.00 membership fee would be billed on 02/01/2020, how the fee would be charged, and how Weichsel could avoid it. The notice did not specify the breakdown: $450 for the primary cardholder and $75 for the additional user. The fee appeared as separate items on Weichsel’s February 2020 billing statement: a $450 charge and another for $75. Weichsel paid $525 but claims that “[h]ad [he] been aware” he could retain his credit card for $450, he would have paid only that amount. Weichsel filed a putative class action, alleging that Chase’s failure to itemize each component of the renewal fee in the December 2019 renewal notice violated the Truth in Lending Act (TILA), 15 U.S.C. 1601, and Regulation Z.The Third Circuit affirmed the dismissal of the suit. Weichsel had standing; he suffered an economic injury based on his assertion that he would not have paid the full $525 if he had known it included the additional card fee. However, neither TILA nor Regulation Z expressly mandates disclosure of each individual component of the total annual fee in a renewal notice. Regulation Z requires itemization of fees on other disclosures but lacks such a requirement for renewal notices. View "Weichsel v. JP Morgan Chase Bank NA" on Justia Law

Mohamad and Ahmed Hammoud, father and son, each filed a Chapter 7 bankruptcy petition, just over a year apart using the same attorney. The petitions contained their similar names, identical addresses, and—mistakenly—Ahmed’s social security number. Although the attorney corrected the social security number on Mohamad’s bankruptcy petition the day after it was filed, Experian failed to catch the amendment and erroneously reported Mohamad’s bankruptcy on Ahmed’s credit report for nine years. Ahmed learned of the uncorrected mistake while attempting to refinance his mortgage. He sued Experian and Equifax, alleging that each had violated the Fair Credit Reporting Act by failing to “follow reasonable procedures to assure maximum possible accuracy” of his reported information, 15 U.S.C. 1681e(b). Equifax and Ahmed settled.The district court granted Experian summary judgment. The Sixth Circuit affirmed. Ahmed had standing to sue but cannot establish that Experian’s procedures were unreasonable as a matter of law. Viewing the facts in the light most favorable to Ahmed, his cognizable injury was fairly traceable to Experian’s actions. A credit reporting agency’s reliance on information gathered by outside entities is reasonable if the information is not “obtained from a source that was known to be unreliable” and is “not inaccurate on its face” or otherwise inconsistent with information already had on file. Experian was not required to implement additional procedures for collecting and verifying corrected information from bankruptcy proceedings. View "Hammoud v. Equifax Information Services, LLC" on Justia Law

Young claims her employer told her that it had received a wage garnishment order in 2019. Young then discovered the existence of a 2010 default judgment against her, in favor of Midland, for a purported debt of $8,529.93 plus interest. Young sued to set aside the 2010 default judgment, based on extrinsic mistake or fraud. She sought damages, penalties, and reasonable attorney fees and costs under the Rosenthal Fair Debt Collection Practices Act (Civ. Code, 1788), arguing that Midland was a debt collector of consumer debt and had engaged in false and deceptive conduct in attempting to collect that debt, citing her contention that she was never served with process. Midland denied Young’s allegations, asserted affirmative defenses, and filed an anti-SLAPP motion (section 425.16) to strike Young’s claims.The trial court granted the anti-SLAPP motions, finding Young did not show she would probably prevail on the merits of her claims and awarded Midland attorney fees and costs. The court of appeal vacated. Young showed she would probably prevail on the merits of her Rosenthal Act claim, producing prima facie evidence that Midland falsely represented substituted service on her was accomplished. She was not required to show that Midland knowingly made this false representation. Young’s Rosenthal Act cause of action was not time-barred. View "Young v. Midland Funding, LLC" on Justia Law