Justia Banking Opinion Summaries

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In 2006-2009,, Ghuman and Khan “flipped” 44 gas stations. Ghuman would recruit a buyer before they purchased the station. The buyers lacked the financial wherewithal to qualify loans. Ghuman and Khan's co-defendant, AEB loan officer Brahmbhatt, arranged loans based on fraudulent documentation. They also created false financial statements for the gas stations. Co-defendant Mehta, an accountant, prepared fictitious tax returns. The loans, which were guaranteed by the Small Business Administration, went into arrears. In 2008-2009 the SBA began auditing the AEB loans; the FBI began looking into suspected bank fraud. AEB ultimately incurred a loss in excess of $14 million. Khan cooperated and pled guilty to one count of bank fraud, 18 U.S.C. 1344, in connection with a $331,000 loan. Ghuman pleaded guilty to another count of bank fraud in connection with a $744,000 loan and to one count of filing a false tax return, 26 U.S.C. 7206. The district court denied Ghuman credit for acceptance of responsibility and imposed a below-Guidelines prison term of 66 months. The court ordered Khan to serve a 36-month prison term and ordered Ghuman to pay $11.8 million and Khan to pay $10.8 million in restitution. The Seventh Circuit affirmed the sentences with an adjustment to Ghuman’s term of supervised release. View "United States v. Khan" on Justia Law

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The Supreme Court held that the entire amount of a homeowners' association's (HOA) yearly assessment can be included in the superpriority piece of an HOA's lien under Nev. Rev. Stat. 116.3116 so long as the assessment became due in the nine months preceding the HOA's recording of its notice of delinquent assessments. When Homeowners did not pay their 2011 yearly assessment, the HOA, in April 2011, recorded a notice of lien for delinquent assessments. A Bank, the beneficiary of the first deed of trust on the property, requested the super priority amount from the HOA's foreclosure agent and then tendered to the foreclosure agent an amount representing nine out of twelve months of assessments. The HOA continued with the foreclosure sale, and Appellants purchased the property. Appellants filed a complaint seeking to quiet title to the property. The district court granted summary judgment for the Bank, concluding that the Bank's tender cured the default on the superpriority portion of the HOA's lien and that the foreclosure sale did not therefore extinguish the Bank's deed of trust. The Supreme Court reversed, holding that because the Bank did not tender the entire superpriority amount before the HOA foreclosed on its lien, the foreclosure sale extinguished the Bank's deed of trust on the property. View "Anthony S. Noonan IRA, LLC v. U.S. Bank National Ass'n" on Justia Law

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Defendant Javier Torres signed a promissory note (Note) secured by a residential mortgage (Mortgage). Torres defaulted on the Note. CitiMortgage, Inc., discovered that it had lost the original Note but had retained a digital copy setting forth its terms. CitiMortgage assigned the Mortgage and its interest in the Note to plaintiff Investors Bank (Investors). In this appeal, the issue presented for the New Jersey Supreme Court's review was whether Investors could enforce the Note. The Supreme Court affirmed the trial court: Investors Bank could enforce the note. Relying on two statutes addressing assignments, N.J.S.A. 2A:25-1 and N.J.S.A. 46:9-9, as well as common-law assignment principles, the Court held Investors had the right as an assignee of the Mortgage and transferee of the Note to enforce the Note. The Court construed N.J.S.A. 12A:3-309 to address the rights of CitiMortgage as the possessor of a note or other instrument at the time that the instrument was lost, but not to supplant New Jersey assignment statutes and common law in the setting of this appeal or to preclude an assignee in Investors’ position from asserting its rights according to the Note’s terms. Read together, "N.J.S.A. 12A:3-309, N.J.S.A. 2A:25-1, and N.J.S.A. 46:9-9 clearly authorized the assignment and entitled Investors to enforce its assigned Mortgage and transferred Note." View "Investors Bank v. Torres" on Justia Law

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Alviso filed suit against numerous parties, including Wells Fargo, that were allegedly involved in a sham transaction by which a seller purported to sell a property to a buyer who obtained a mortgage loan from Aviso to fund the purchase. The title insurer involved in the sham transaction, WFG Title, is Alviso's successor-in-interest and is not prosecuting the action. The trial court granted summary judgment for Wells Fargo, finding that it had no legal obligation to maintain public title records and further finding that equity did not justify displacing Wells Fargo as senior lienholder. The Court of Appeal affirmed and held that the trial court properly granted Wells Fargo's motion for summary judgment. The court held that a fraudulent or forged deed does not convey valid title and, because Wells Fargo was not negligent, neither equitable estoppel nor Civil Code section 3543 is applicable. Finally, the court held that Alviso's remaining arguments are forfeited. View "WFG National Title Insurance Co. v. Wells Fargo Bank NA" on Justia Law

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A mortgage conveys an interest in real property as security. Lenders often require borrowers to maintain hazard insurance that protects the property. If the borrower fails to maintain adequate coverage, the lender may buy the insurance and force the borrower to cover the cost (force-placed coverage). States generally require insurers to file their rates with an administrative agency and may not charge rates other than the filed rates. The filed-rate is unassailable in judicial proceedings even if the insurance company defrauded an administrative agency to obtain approval of the rate. Borrowers alleged that their lender, Nationstar, colluded with an insurance company, Great American, and an insurance agent, Willis. Great American allegedly inflated the filed rate filed so it and Willis could return a portion of the profits to Nationstar to induce Nationstar’s continued business. The borrowers paid the filed rate but claimed that the practice violated their mortgages, New Jersey law concerning unjust enrichment, the implied covenant of good faith and fair dealing, and tortious interference with business relationships; the New Jersey Consumer Fraud Act; the Truth in Lending Act, 15 U.S.C. 1601–1665; and RICO, 18 U.S.C. 1961–1968. The Third Circuit affirmed the dismissal of the suit. Once an insurance rate is filed with the appropriate regulatory body, courts have no ability to effectively reduce it by awarding damages for alleged overcharges: the filed-rate doctrine prevents courts from deciding whether the rate is unreasonable or fraudulently inflated. View "Leo v. Nationstar Mortgage LLC of Delaware" on Justia Law

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In 2006, Adams obtained a loan secured by a deed of trust against Vallejo residential property. Adams obtained a loan from an individual, Gallegos, secured by a separate deed of trust recorded against the same property. Adams defaulted on the junior loan, resulting in foreclosure and a trustee’s sale in 2008. Gallegos was the purchaser. The property was still subject to the senior loan; Adams remained the "Borrower,” named on the deed of trust. In 2017, Adams filed for chapter 7 bankruptcy. After her discharge, Adams filed a complaint, alleging “Violations of the Homeowners’ Bill of Rights” (HBOR), based on her 2016-2017 negotiations for a loan modification. She claimed that the defendants recorded notices of default and of trustee’s sale on the senior loan and failed to provide her with a single point of contact while her application was pending. The court granted the defendants judgment on the pleadings. The court of appeal reversed. While the complaint failed to allege facts sufficient to state a cause of action under the HBOR the trial court abused its discretion when it denied Adams leave to amend. The facts alleged in the complaint together with matters that are subject to judicial notice do not establish that the property is Adams’s principal residence as required under HBOR but there is a reasonable possibility that amendment of the complaint would cure this defect. View "Adams v. Bank of America" on Justia Law

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A judicial foreclosure proceeding is not a form of debt collection when the proceeding does not include a request for a deficiency judgment or some other effort to recover the remaining debt. If a foreclosure plaintiff seeks not only to foreclose on the property but also to recover the remainder of the debt through a deficiency judgment, then the plaintiff is attempting to collect a debt within the meaning of the Fair Debt Collection Practices Act (FDCPA). But if the plaintiff is simply enforcing a security interest by retaking or forcing a sale of the property, without regard to any additional debt that may be owed, then the FDCPA does not apply. The Ninth Circuit affirmed the district court's dismissal of plaintiff's action under the Fair Debt Collection Practices Act over a judicial foreclosure proceeding in Oregon. The panel held that plaintiff pleaded no conduct by the defendants beyond the filing of a foreclosure complaint and actions to effectuate that proceeding. View "Barnes v. Routh Crabtree Olsen PC" on Justia Law

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The Ninth Circuit affirmed the district court's grant of summary judgment to Freddie Mac and M&T in a quiet title action over a foreclosed property in Nevada. At issue was whether a first deed of trust in favor of Freddie Mac, which had been placed under the conservatorship of the Federal Housing Finance Agency (FHFA), survived a non-judicial foreclosure sale of a Nevada residential property to satisfy an HOA superpriority lien. The panel held, and the parties agree, that the Housing and Economic Recovery Act (HERA) statute of limitations, 12 U.S.C. 4617(b)(12)(A), controls. The panel held that, under 12 U.S.C. 4617(b)(12), a quiet title action is a "contract" claim that is subject to a statute of limitations of at least six years; Freddie Mac and M&T Bank timely filed their quiet title action within six years of the foreclosure sale; and Freddie Mac's deed of trust, which had been placed under the conservatorship of FHFA, survived a non-judicial foreclosure sale of a Nevada residential property to satisfy a homeowners association superpriority lien. The panel also held that, although Freddie Mac and the Bank were not assignees of the FHFA, Freddie Mac was under the FHFA conservatorship, and the FHFA thus had all the rights of Freddie Mac with respect to its assets. Furthermore, although there was no contract between the purchaser and plaintiffs, the quiet title claims were entirely "dependent" upon Freddie Mac's lien on the property, an interest created by contract. View "M&T Bank v. SFR Investments Pool 1, LLC" on Justia Law

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Abelardo Martinez, who was blind, brought an action against San Diego County Credit Union (Credit Union) claiming its website was incompatible with software permitting him to read website content. He alleged this defect denied him equal access to, and full enjoyment of, the Credit Union's website and its physical locations. Martinez asserted a single cause of action under the Unruh Civil Rights Act based on two alternate theories: (1) Credit Union's website violated the American Disabilities Act (ADA); and (2) Credit Union's actions constituted intentional discrimination prohibited by the Unruh Civil Rights Act. On the day scheduled for jury selection, the court dismissed the action on its own motion based on its understanding Martinez was intending to pursue only the ADA theory, and the court's finding Martinez had not sufficiently alleged Credit Union's website constitutes a "public accommodation" within the meaning of the ADA (although the court characterized its ruling as a nonsuit, the parties agree it was a conclusion based solely on Martinez's pleadings). Martinez appealed. The Court of Appeal found the trial court erred in dismissing the action at the pleadings stage based on the ADA's public-accommodation element: a disabled plaintiff can state a viable ADA claim for alleged unequal access to a private entity's website if there is a sufficient nexus between the claimed barriers and the plaintiff's ability to use or enjoy the goods and services offered at the defendant's physical facilities. Under this standard, the Court found Martinez alleged a sufficient nexus to state an ADA violation. The Court rejected the Credit Union's alternate argument that the dismissal was proper because the United States Congress has not enacted specific website accessibility standards. View "Martinez v. San Diego County Credit Union" on Justia Law

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Citi filed suit against Corte Madera Homeowners Association for wrongful foreclosure, breach of the statutory duty of good faith by Nev. Rev. Stat. 116.1113, and quiet title. Nev. Rev. Stat. 116.3116(1) allows HOAs to pursue liens on members' homes for unpaid assessments and charges. The district court granted summary judgment in favor of defendants. The Ninth Circuit affirmed the district court's ruling regarding the adequacy of the lender's tender, holding that BANA's offer did not constitute valid tender. The panel held that 7510 Perla Del Mar Ave Tr. v. Bank of America, N.A., 458 P.3d 348, 350-51 (Nev. 2020) (en banc) -- which held that a mere offer to pay at a later time, after the superpriority amount was determined, does not constitute a valid tender -- did not alter the validity of Citi's tender because BANA insisted on the same condition that Perla Del Mar prohibited. The panel held that the district court did not err when it concluded that Citi was obligated to satisfy the superpriority portion of the lien in order to protect its interest. Furthermore, the district court did not err by observing that Citi's offer to pay nine months' assessments was not the equivalent of an offer to pay the superpriority portion of Corte Madera's lien. Therefore, in light of Perla Del Mar, the district court did not err by ruling that Citi's tender was impermissibly conditional. The panel rejected Citi's alternative arguments. However, the panel remanded for reconsideration of the complaint's allegation that Corte Madera's foreclosure notices violated the homeowner's bankruptcy stay. View "CitiMortgage, Inc. v. Corte Madera Homeowners Ass'n" on Justia Law