Justia Banking Opinion Summaries

The Cocrofts acquired a home in Country Club Hills, Illinois. In 2007, they refinanced their mortgage. As part of the transaction, the Cocrofts’ mortgage and loan were pooled into a mortgage loan trust. A year later, the Cocrofts ceased making payments. The lender became aware that the property was vacant and was “a mess” and entered to winterize. The Cocrofts claimed to have the right to rescission because the lender committed various unspecified disclosure violations in contravention of several federal statutes. The trustee initiated a foreclosure action. The Cocrofts filed suit, raising claims against Mortgage Electronic Registration Systems (MERS), Bank of America, BAC Home Loans Servicing, and HSBC Bank. The Seventh Circuit affirmed summary judgment for defendants on all claims. An alleged violation of the Illinois Consumer Fraud and Deceptive Business Practices Act was based HSBC Bank’s letter, in which it indicated that it was unable to locate an account for the Cocrofts; the Cocrofts offered no evidence that this was deceptive. The court rejected a wrongful possession claim; the lender was entitled to enter the property to winterize. The Colcrofts lacked standing to challenge the transfer of the property into the trust. View "Cocroft v. HSBC Bank USA, N.A." on Justia Law

The bank wanted to foreclose on appellant Gregory Erkins' property. Appellant alleged that he was incapacitated when he entered into the loan contract and attempted to use this defense against a bank that was a subsequent purchaser of the note. In the first appeal of this case, the Alaska Supreme Court held that summary judgment had been improperly granted to the bank, and remanded for further proceedings. On remand, the superior court granted summary judgment on different grounds, concluding the bank was a holder of the note in due course, and therefore immune from appellant's incapacity defense. The Supreme Court agreed with the superior court this time, and affirmed. View "Erkins v. Alaska Trustee, LLC" on Justia Law

Appellants filed a promissory note that was secured by a deed of trust on their property. At the time that Appellants defaulted, Respondent was the holder of the note and Mortgage Electronic Registration Systems, Inc. (MERS) was the beneficiary of the deed of trust securing the note. After Appellants filed for bankruptcy, MERS assigned its interest in the deed of trust to Respondent. Before the assignment was recorded, Respondent filed a proof of claim in Appellants’ bankruptcy claiming that it was a secured creditor. Respondent then filed a motion for relief from the automatic bankruptcy stay so that it could foreclose on Appellants’ property. Appellants argued that Respondent was not a secured creditor because it did not have a unified note and deed of trust when the bankruptcy petition was filed. The United States Bankruptcy Court certified two questions of law to the Supreme Court concerning the legal effect on a foreclosure when the promissory note and deed of trust are split at the time of foreclosure. The Supreme Court concluded (1) when the promissory note is held by a principal and the beneficiary under the deed of trust is the principal’s agent at the time of foreclosure, reunification of the note and the deed of trust is not required to foreclose; and (2) as a matter of law, the recording of an assignment of a deed of trust is a ministerial act. View "In re Montierth" on Justia Law

Appellants filed a promissory note that was secured by a deed of trust on their property. At the time that Appellants defaulted, Respondent was the holder of the note and Mortgage Electronic Registration Systems, Inc. (MERS) was the beneficiary of the deed of trust securing the note. After Appellants filed for bankruptcy, MERS assigned its interest in the deed of trust to Respondent. Before the assignment was recorded, Respondent filed a proof of claim in Appellants’ bankruptcy claiming that it was a secured creditor. Respondent then filed a motion for relief from the automatic bankruptcy stay so that it could foreclose on Appellants’ property. Appellants argued that Respondent was not a secured creditor because it did not have a unified note and deed of trust when the bankruptcy petition was filed. The United States Bankruptcy Court certified two questions of law to the Supreme Court concerning the legal effect on a foreclosure when the promissory note and deed of trust are split at the time of foreclosure. The Supreme Court concluded (1) when the promissory note is held by a principal and the beneficiary under the deed of trust is the principal’s agent at the time of foreclosure, reunification of the note and the deed of trust is not required to foreclose; and (2) as a matter of law, the recording of an assignment of a deed of trust is a ministerial act. View "In re Montierth" on Justia Law

Plaintiffs described a predatory lending scheme affecting numerous borrowers nationwide, allegedly masterminded by Shumway, a residential mortgage loan business operating through other entities and title companies, to offer high-interest mortgage-backed loans to financially strapped homeowners. As a non-depository lender, Shumway was subject to fee caps and interest ceilings imposed by state mortgage lending laws. Plaintiffs claimed that, to circumvent those limitations, Shumway formed associations with banks, including CBNV and Guaranty, which were depository institutions. Plaintiffs alleged that CBNV and Guaranty uniformly misrepresented the apportionment and distribution of settlement and title fees on their HUD–1 Settlement Statement forms. The district court certified a nationwide class of individuals who received residential mortgage loans from CBNV. Two previous appeals involved certification of settlement classes. In a third appeal, the Third Circuit rejected arguments that there was a fundamental class conflict that undermines the adequacy of representation provided by class counsel; that the court conditionally certified the class and thus erred; and that the putative class does not meet the ascertainability, commonality, predominance, superiority, or manageability requirements of Federal Rule of Civil Procedure 23. View "In re: Community Bank of N. Va." on Justia Law

Plaintiffs described a predatory lending scheme affecting numerous borrowers nationwide, allegedly masterminded by Shumway, a residential mortgage loan business operating through other entities and title companies, to offer high-interest mortgage-backed loans to financially strapped homeowners. As a non-depository lender, Shumway was subject to fee caps and interest ceilings imposed by state mortgage lending laws. Plaintiffs claimed that, to circumvent those limitations, Shumway formed associations with banks, including CBNV and Guaranty, which were depository institutions. Plaintiffs alleged that CBNV and Guaranty uniformly misrepresented the apportionment and distribution of settlement and title fees on their HUD–1 Settlement Statement forms. The district court certified a nationwide class of individuals who received residential mortgage loans from CBNV. Two previous appeals involved certification of settlement classes. In a third appeal, the Third Circuit rejected arguments that there was a fundamental class conflict that undermines the adequacy of representation provided by class counsel; that the court conditionally certified the class and thus erred; and that the putative class does not meet the ascertainability, commonality, predominance, superiority, or manageability requirements of Federal Rule of Civil Procedure 23. View "In re: Community Bank of N. Va." on Justia Law

Appellants guaranteed two commercial loans that loans were eventually assigned to Bank. When the properties securing the commercial loans were foreclosed, Bank brought a breach of guaranty action against Appellants. At issue at trial was the application of Nev. Rev. Stat. 40.459(1)(c), which reduces the amount of some deficiency judgments. The district court concluded that section 40.459(1)(c) would be retroactive if applied to Appellants’ loans because the statute took effect after the loans were assigned and that Appellants were therefore liable for the full deficiency. The Supreme Court subsequently published Sandpointe Apartments v. Eighth Judicial District Court, which held that section 40.459(1)(c) is prospective if there has been no foreclosure sale on the underlying loan as of the date the statute was enacted. The foreclosure sale in this case occurred more than two months after section 40.459(1)(c) took effect. The Fords filed a motion pursuant to Nev. R. Civ. P. 60(b)(5) asking the district court to set aside the judgment against them. The district court denied the motion. The Supreme Court affirmed, holding that Rule 60(b)(5) is not an appropriate avenue for seeking relief based on new or changed precedent, even if enforcement might be inequitable. View "Ford v. Branch Banking & Trust Co." on Justia Law

Bank of America loaned Leipzig $960,000, secured by a deed of trust on a Brentwood, Tennessee residence. Leipzig assigned his rights in the residence to a trust, which leased it to Johannessen in 2010. The lease had a five-year term and an option to buy. Johannessen exercised that option in 2011, but otherwise did not act to obtain title. Leipzig stopped making payments. In 2013, Johannessen assigned his lease and option rights to Anarion; the residence was in foreclosure. Published foreclosure notices stated that Brock was a “substitute trustee” for purposes of the loan “by an instrument duly recorded.” Anarion alleges there was no such “instrument,” and, based on that putative “misrepresentation,” sued under the Fair Debt Collection Practices Act, 15 U.S.C. 1692. The court dismissed, holding that Anarion is not a “person” under the Act, which states that “any debt collector who fails to comply with any provision of this subchapter with respect to any person is liable.” The Sixth Circuit reversed, reasoning that section 1692a(3), defines “consumer” to mean “any natural person,” suggesting that, when Congress meant to refer only to natural persons, it did so expressly. The court noted that its decision does not mean that Anarion can bring suit under the FDCPA. View "Anarion Invs., LLC v. Carrington Mortg. Servs., LLC" on Justia Law

Knickel approached Macquarie Bank about a loan to develop North Dakota oil and gas leases, providing confidential information about leased acreage that he had assembled over 10 years. Macquarie entered agreements with Knickel’s companies, LexMac and Novus. His other company, Lexar was not a party. Macquarie acquired a mortgage lien and perfected security interest in the leases and in their extensions or renewals. Royalties and confidential information—reserves reports on the acreage, seismic data, and geologic maps—also served as collateral. The companies defaulted. Because of the lack of development or production, many leases were set to expire. Knickel claims he agreed to renew only leases that included automatic extensions. Macquarie claims that Knickel promised to renew all leases serving as collateral in the names of LexMac and Novus. Upon the expiration of the leases without automatic extensions, Knickel entered into new leases in the name of Lexar, for development with LexMac and Novus, since they owned the confidential information. A foreclosure judgment entered, declaring that LexMac and Novus’s interest in the leases would be sold to satisfy the debt: $5,296,252.29,. Marquarie filed notice of lis pendens on Lexar’s leases, leased adjoining acreage, used the confidential information to find a buyer, and sold the leases at a profit of about $7,000,000. Marquarie filed claims of deceit, fraud, and promissory estoppel, and alleged that the corporate veil of the companies should be pierced to hold Knickel personally liable. The defendants counterclaimed misappropriation of trade secrets and unlawful interference with business. The Eighth Circuit affirmed summary judgment on all but one claim and judgment that Macquarie had misappropriated trade secrets. View "Macquarie Bank Ltd. v. Knickel" on Justia Law

Townsend signed a note and a mortgage to purchase a condominium. After Townsend defaulted, HSBC sought foreclosure under Illinois law. Representing himself, Townsend answered the complaint. HSBC moved for summary judgment, submitting evidence of default; that Townsend owed $141,425.65; and that HSBC owned the note and mortgage. Townsend failed to respond. The court entered a judgment of foreclosure, an order finding that Townsend owed $143,569.65, and an order providing for judicial sale if Townsend did not pay before the redemption period expired. The court wrote that the judgment was “a final and appealable order” that was “fully dispositive” under Federal Rule of Civil Procedure 54(b), but retained jurisdiction to enforce or vacate (in the event of reinstatement) the judgment. The court acknowledged that it might have to hold a hearing to confirm the judicial sale under Illinois law and could decide not to confirm, if appropriate parties did not receive proper notice, if sale terms were unconscionable, if the sale was conducted fraudulently, “or … justice was otherwise not done.” The Seventh Circuit dismissed an appeal for lack of jurisdiction. The judgment of foreclosure and judicial sale posed no imminent threat of irreparable harm to Townsend. His interests are protected under Illinois law. Because entry of the Rule 54(b) judgment compelled Townsend to appeal when he did, the court ordered that costs on appeal be assessed against HSBC. View "HSBC Bank USA, N.A. v. Townsend" on Justia Law