Justia Banking Opinion Summaries

Plaintiffs refinanced their home through Lender. The monthly payment on the loan was $600 greater than Plaintiffs' total monthly income. After the mortgage was funded, it was sold and assigned to Bank. Servicer serviced the loan. After Plaintiffs defaulted on the loan, Bank foreclosed on the mortgage. Plaintiffs subsequently brought this action asserting violations of the Consumer Protection Act, the Predatory Home Loan Practices Act, and the Borrower's Interest Act, and asserting that the loan was unenforceable because it was unconscionable. A superior court judge granted summary judgment to Defendants, Bank and Servicer, on all claims based on the ground that Defendants, as assignees, had no liability for the acts of Lender. The Supreme Court (1) reversed summary judgment in favor of Bank, holding that Bank was not shielded from liability as a matter of law by virtue of its status as an assignee and that Bank failed to establish the absence of material issues of disputed fact entitling it to judgment on any individual claim; and (2) affirmed summary judgment in favor of Servicer because Servicer was not shown to be an assignee and Plaintiffs offered no alternative basis on which Servicer might be held liable. Remanded. View "Drakopoulos v. U.S. Bank Nat'l Ass'n" on Justia Law

Karla Brown brought a lawsuit against Deutsche Bank and others seeking rescission of a note and first mortgage securing that note, alleging that she was the victim of a predatory lending scheme. The mortgage was originated by Deutsche Bank's predecessor in interest in connection with the purchase of Brown's home. Deutsche Bank requested that First American Title Insurance Company defend Deutsche Bank's mortgage interest pursuant to the terms of its title insurance policy. First American refused coverage, claiming the lawsuit did not trigger its duty to defend because Brown was claiming she was misinformed as to the terms of the note rather than challenging that she granted the mortgage. Deutsche Bank subsequently brought this action seeking a judgment declaring First American had a duty to defend it in Brown's lawsuit. The superior court granted summary judgment in favor of First American. The Supreme Court affirmed, holding that the allegations in Brown's complaint did not trigger First American's duty to defend because the complaint's claims were not specifically envisioned by the terms of the title insurance policy. View "Deutsche Bank Nat'l Ass'n v. First Am. Title Ins. Co." on Justia Law

This case involved multiple litigations among three parties - Insurer, insured Mortgagee, and Homeowner - arising out of a defect in the title to Homeowner's home. Insurer brought suit in the land court on behalf of Mortgagee seeking to reform the deed to the property or to equitably subrogate Homeowner's interest in the property behind Mortgagee's mortgage. Homeowner initiated suit in the superior court against Mortgagee. Eventually, all claims in both actions became part of a federal court case, which settled. Thereafter, Mortgagee filed a complaint against Insurer in the U.S. district court seeking to recover from Insurer for the costs Mortgagee incurred in defending against Homeowner's claims. The judge determined Insurer had no obligation under its title insurance policy to pay Mortgagee's defense costs but certified two questions to the Massachusetts Supreme Court. The Court answered by holding that, under Massachusetts law (1) a title insurer does not have a duty to defend the insured in the entire lawsuit where one claim is within the scope of the title insurance coverage and other claims are not; and (2) a title insurer that initiates litigation similarly does not have a duty to defend the insured against all reasonably foreseeable counterclaims. View "GMAC Mortgage, LLC v. First Am. Title Ins. Co." on Justia Law

Construction Company contracted with Subcontractor for construction of elements of an HVAC system. As partial collateral for a revolving line of credit, Subcontractor assigned to Bank its right to receive payment under the contract with Construction Company. Construction Company instead made twelve payments to Subcontractor. Subcontractor subsequently ceased business operations, leaving an outstanding debt to Bank on its line of credit. Bank filed an action against Construction Company for breach of contract and violation of the UCC. A jury found (1) Construction Company liable on both counts for ten of the twelve checks that it had delivered to Subcontractor, and (2) Bank was estopped from recovering with respect to the final two checks. The judge entered judgment on the statutory claim in the amount of $3,015,000, the full face value of the ten checks. The Supreme Court affirmed in part and reversed in part, holding that the trial judge (1) properly entered judgment on Bank's statutory claim in the amount of the wrongfully midirected payments; but (2) erred in denying the bank's motion for partial judgment notwithstanding the verdict with respect to the final two checks, as there was insufficient evidence to support Construction Company's defense of estoppel. View "Reading Coop. Bank v. Constr. Co." on Justia Law

Premier Capital, LLC was in the business of debt acquisition, management, and collection. On July 3, 2007, Premier filed an action in the superior court alleging that it was the current holder of a sealed promissory note from Max Zeller Furs, Inc., executed on September 10, 1987, and that KMZ, Inc. was liable on the note as the successor in interest. The superior court granted summary judgment for KMZ on the ground that Premier's complaint was not timely filed under the six-year statute of limitations set forth in Mass. Gen. Laws ch. 106, 3-118. The Supreme Court reversed, holding (1) although the statute does apply to actions on a sealed promissory note, it only applies to causes of action accruing after its enactment in 1998; and (2) because Premier's cause of action accrued before the statute was enacted, and the note upon which Premier filed suit was executed under seal, Premier timely commenced its action against KMZ under the twenty-year statute of limitations governing actions on contracts under seal set forth in Mass. Gen. Laws ch. 260, 1. Remanded. View "Premier Capital, LLC v. KMZ, Inc." on Justia Law

Plaintiff bank (Bank) claimed to be the holder of a mortgage given by Defendant. Bank filed a complaint in equity in the land court under the Massachusetts Soldiers' and Sailors' Civil Relief Act to determine if Defendant was entitled to foreclosure protections under the Federal Servicemembers Civil Relief Act (SCRA). Defendant conceded she was not entitled to protection under the SCRA but moved to dismiss the complaint on the ground that Bank lacked standing to bring a servicemember proceeding because it was not the clear holder of her note or mortgage. The land court denied Defendant's motion, determining that Bank had standing based on its right to purchase Defendant's mortgage. The court then authorized Bank to make an entry and to sell the property covered by the mortgage. The Supreme Court vacated the land court's judgment, holding (1) because Defendant was not entitled to appear or be heard at the servicemember proceeding, the land court should not have accepted or entertained Defendant's filings; (2) only mortgagees or those acting on behalf of mortgagees having standing to bring servicemember proceedings; and (3) in the present case, the judge used the incorrect standard in making the determination that Bank had standing. Remanded. View "HSBC Bank USA, N.A. v. Matt" on Justia Law

The sole issue in this appeal was whether an uncontroverted affidavit attesting to the statutory form "Affidavit of Sale under Power of Sale in Mortgage" was sufficient to show compliance with the power of sale for the purpose of establishing the right of possession by motion for summary judgment in a summary process action. A judge in the housing court ruled in favor of the plaintiff, the Federal National Mortgage Association (Fannie Mae), on the parties' cross motions for summary judgment, and the defendant, Oliver Hendricks, appealed. Hendricks asserted error in the grant of summary judgment to Fannie Mae, where the statutory form failed to set forth "fully and particularly" the acts taken to exercise the power of sale in Hendricks's mortgage, as required by Mass. Gen. Laws ch. 244, 15. The Supreme Court affirmed the judgment, holding (1) because the statutory form that Fannie Mae offered in support of its motion for summary judgment was sufficient within the meaning of Mass. Gen. Laws ch. 183, 8, it made out a prima facie case of compliance with chapter 244, 14; and (2) because there was no genuine issue of material fact to be decided, Fannie Mae was entitled to summary judgment. View "Fed. Nat'l Mortgage Ass'n v. Hendricks" on Justia Law

In 2000 Go-Best wired $5 million to an account entitled "Morris M. Goldings client account" at Citizens Bank, based on representations made by Morris M. Goldings, who was then a Massachusetts attorney. Goldings later admitted that the representations were false and that he had used the money to pay other debts. Go-Best filed suit against Citizens Bank, bringing claims of misrepresentation, conversion, aiding and abetting a fraud, aiding and abetting a breach of fiduciary duty, aiding and abetting a conversion, and negligence. Citizens Bank had no knowledge of Goldings's scheme to defraud Go-Best but failed to notify the Board of Bar Overseers of dishonored checks issued on the client account more than six months before Go-Best wired funds into that account. The trial court dismissed, but a divided Appeals Court reversed in part, vacating dismissal of claims of negligence and of aiding and abetting. The Massachusetts Supreme Court reinstated dismissal. Without actual knowledge, the bank's duty to notify the board of dishonored checks from trust accounts arose only from its contractual duty, not from any duty in tort, so the bank could not be liable to Go-Best for any negligence in fulfilling that duty. View "Go-Best Assets Ltd. v. Citizens Bank of MA" on Justia Law

A judge preliminarily enjoined Federal National Mortgage Association (Fannie Mae) from proceeding to evict plaintiff, Eaton, from her home, following a foreclosure sale by Green Tree Servicing, as mortgagee. The judge ruled that Eaton likely would succeed on her claim that for a valid foreclosure sale to occur, both the mortgage and the underlying note must be held by the foreclosing party; Green Tree stipulated that it held only Eaton's mortgage. The supreme court vacated the injunction, announcing a new statutory interpretation to apply to foreclosures under the power of sale where statutory notice is provided after the date of this decision. A foreclosure sale conducted pursuant to a power of sale in a mortgage must comply with all applicable statutory provisions, particularly G.L. c. 183, 21, and G.L. c. 244, 14, which authorize a "mortgagee" to foreclose by sale pursuant to a power of sale in the mortgage, and require the "mortgagee" to provide notice and take other steps. The term "mortgagee" is not free from ambiguity, according to the court, but refers to the person or entity then holding the mortgage and also either holding the mortgage note or acting on behalf of the note holder. View "Eaton v. Fed. Nat'l Mort. Ass'n" on Justia Law

This case stemmed from the enactment of St. 2010, c. 258, on August 7, 2010, which prohibited institutional lenders and certain financial institutions who owned foreclosed properties from evicting residential tenants without just cause. At issue was whether the act required dismissal of a no-cause summary process case that was already pending when the act went into effect, or whether the application of the act to such a case was impermissibly retroactive. The court held that the provision of the act that prevented eviction without just cause was properly applied to protect all residential tenants on foreclosed properties who, on or after August 7, 2010, had yet to vacate or be removed from the premises by an eviction, even where the owner purchased the property before the act's effective date, and initiated a summary process action before that date. Because the tenant, in this case, was still residing on the property on August 7, 2010, and the owner was seeking to evict him without just cause, the court held that the Housing Court judge properly applied the act to dismiss the pending claim for possession.