Justia Banking Opinion Summaries

Ahmed co‐owned an LLC that owned a condominium building. Ahmed recruited individuals to pose as buyers for the building's units and to submit fraudulent loan applications to lenders, including Fifth Third. The participants split the loan proceeds; no payments were made on the loans. Kaufman was the seller's attorney for every closing. The closings were conducted by Traditional Title at Kaufman’s law office. Traditional received closing instructions from Fifth Third to notify it immediately of any misrepresentations and to suspend the transaction if “the closing agent has knowledge that the borrower does not intend to occupy the property.” Kaufman concealed the buyers’ misrepresentations and instructed closing agents to complete closings even when buyers were purchasing multiple properties. Ahmed and Kaufman extended the scheme to other buildings. Although Kaufman testified that he was not aware of the fraud, Ahmed testified that Kaufman knew the buyers were part of the scheme. Two closing agents testified that they informed Kaufman about misrepresentations in loan applications. The Seventh Circuit affirmed a fraud judgment for Fifth Third. Kaufman participated individually in each closing as counsel and personally directed Traditional’s employees to conceal the fraud from Fifth Third, for his personal gain. The judgment against Kaufman was not derived solely from Traditional’s liability, based on his membership in the LLC, so the Illinois LLC Act does not bar his liability. Kaufman is not shielded by being the attorney for the seller in the fraudulent transactions. View "Fifth Third Mortgage Company v. Kaufman" on Justia Law

Plaintiff-borrowers Thaddeus Potocki and Kelly Davenport sued Wells Fargo Bank, N.A. and several other defendants (collectively, “Wells Fargo”) arising out of plaintiffs’ attempts to get a loan modification. The trial court sustained Wells Fargo’s demurrer to the third amended complaint without leave to amend. On appeal, plaintiffs argued: (1) a forbearance agreement obligated Wells Fargo to modify their loan; (2) the trial court erred in finding Wells Fargo owed no duty of care; (3) Wells Fargo’s denial of a loan modification was not sufficiently detailed to satisfy Civil Code section 2923.61; and (4) a claim of intentional infliction of emotional distress was sufficiently pled. The Court of Appeal determined plaintiffs’ third contention had merit, and reversed judgment of dismissal, vacated the order sustaining the demurrer insofar as it dismissed the claim for a violation of section 2923.6, and remanded for further proceedings. View "Potocki v. Wells Fargo Bank, N.A." on Justia Law

Plaintiff filed suit against Wells Fargo in tort for negligent mortgage modification and other claims. The trial court sustained Wells Fargo's demurrer, partly because Wells Fargo did not owe plaintiff a duty in tort during contract negotiation.The Court of Appeal held that no tort duty exists during contract negotiations for mortgage modification. Therefore, the court affirmed the trial court's judgment, finding that the majority of other states are against it, and the most recent Restatement counsels against this extension because other bodies of law—breach of contract, negligent misrepresentation, promissory estoppel, fraud, and so forth—are better suited to handle contract negotiation issues. View "Sheen v. Wells Fargo Bank, N.A." on Justia Law

The Supreme Judicial Court affirmed the judgment of the business and consumer docket dismissing as time-barred Plaintiff's complaint against U.S. Bank, N.A., the servicer of a mortgage she executed to secure a loan, holding that the court correctly dismissed the complaint as untimely filed.Plaintiff fully performed her obligations arising from a transaction in which she borrowed money and executed a mortgage to secure the loan. Four years after her claim accrued, Plaintiff brought this action under Me. Rev. Stat. 33, 551, alleging that U.S. Bank did not fulfill its statutory duty when it came time for the mortgage to be discharged. The business and consumer docket concluded that the claim was subject to the one-year limitation period set forth in Me. Rev. Stat. 14, 858 and was thus time-barred. The Supreme Judicial Court affirmed, holding that the court correctly dismissed the complaint because it was subject to the one-year statute of limitations. View "Denutte v. U.S. Bank, N.A." on Justia Law

In this foreclosure case, a panel of the First Circuit withdrew its earlier opinion in this case, vacated the judgment below, and certified a question to the Massachusetts Supreme Judicial Court (SJC), reasoning that if serious harm was threatened as a result of this litigation that might prompt the SJC to reexamine its precedents, the SJC can address it.In the First Circuit's previous decision, the panel concluded that JP Mortgage Chase, holder of a mortgage on Plaintiffs' home, could not properly foreclose the mortgage based on Plaintiffs' failure to pay their required months installments because the foreclosure notice was inaccurate. Citing wide support from the banking community, Chase filed a petition for rehearing, claiming that a state banking regulation required Chase to use the precise language it had used in its pre-foreclosure notice to Plaintiffs. The First Circuit ordered certification of a question to the SJC regarding the pre-foreclosure notice in this case and whether the notice was inaccurate or deceptive in a manner that rendered the subsequent foreclosure sale void under Massachusetts law. View "Thompson v. JPMorgan Chase Bank, N.A." on Justia Law

The Real Estate Settlement Procedures Act (RESPA) creates a cause of action for “borrower[s],” 12 U.S.C. 2605(f). Tara and Nathan Keen got a loan and took out a mortgage when they bought their house. Both of them signed the mortgage; only Nathan signed the loan. The pair later divorced. Nathan gave Keen full title to the house. He died shortly afterward. Although Tara was not legally obligated to make payments on the loan after Nathan died, she made payments anyway so she could keep the house. She later ran into financial trouble, fell behind on those payments, and contacted the loan servicer, Ocwen. After unsuccessful negotiations, Ocwen proceeded with foreclosure. The house was sold to a third-party buyer, Helson. Soon after foreclosure, Tara sued both Ocwen and Helson, alleging that Ocwen violated the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. 2601, which requires that loan servicers take certain steps when a borrower asks for options to avoid foreclosure. Tara alleged that Ocwen failed to properly review her requests before it foreclosed on her house. The Sixth Circuit affirmed the dismissal of Keen’s RESPA claims. RESPA’s cause of action extends only to “borrower[s].” Keen was not a “borrower” because she was never personally obligated under the loan agreement. View "Keen v. Helson" on Justia Law

In this foreclosure action, the Supreme Court held that Defendants John Sanzo and Maria Sanzo were not entitled to the homestead exemption, which is available when a creditor forecloses on a judgment lien but not on a consensual lien. See Conn. Gen. Stat. 52-352(b).Plaintiff, Rockstone Capital, LLC held judgment liens against Defendants. The parties agreed to a consensual lien in the form of a mortgage to secure the debt. Defendants defaulted on the mortgage payments, and Plaintiff sought to foreclose on the mortgage. Defendants invoked the homestead exemption. The trial court decided that the exemption should apply and rendered judgment for Plaintiff on the judgment liens, subject to the homestead exemption. The Appellate Court reversed, holding that the homestead exemption did not apply to a consensual lien such as a mortgage. The Supreme Court affirmed, holding that the Appellate Court properly found that the appeal was taken from a final judgment and the mortgage was a consensual lien. View "Rockstone Capital, LLC v. Sanzo" on Justia Law

Deutsche Bank National Trust Company ("Deutsche Bank"); MERSCORP, Inc., and Mortgage Electronic Registration Systems, Inc. (collectively, "MERS"); and CIS Financial Services, Inc. ("CIS"), petitioned the Alabama Supreme Court for permission, pursuant to Rule 5, Ala. R. App. P., to appeal the trial court's denial of their motions seeking to dismiss the claims of the plaintiffs-- Walker County and Rick Allison, in his official capacity as judge of probate of Walker County (collectively, "plaintiffs")--seeking class-based relief on behalf of themselves and all other similarly situated Alabama counties and judges of probate. At issue was a particular aspect of the mortgage-securitization process. Deutsche Bank served as trustee for numerous residential mortgage-backed security ("RMBS") trusts containing mortgages for properties located in Walker County and other Alabama counties. In this case, plaintiffs initiated the underlying litigation against Deutsche Bank "seeking to recover the benefit [Deutsche Bank allegedly] received by relying on the real property recording systems of the Counties without compensating the Counties for that benefit." Plaintiffs alleged that Alabama law requires mortgage assignments to be recorded; therefore, they maintained, the MERS system used by Deutsche Bank avoided the proper recording of mortgage assignments, along with the payment of the requisite filing fees, and has resulted in lost income to county governments. The Alabama Supreme Court reversed the trial court and remanded: “We see no intent in the Code section to embrace a mandatory rule that all conveyances, which would include not only real-property conveyances but also apparently all conveyances of personal property, are required to be recorded in the probate court. Instead, 35-4-50 simply states that the probate court is where conveyances that are required by law to be filed must be filed. Section 35-4-51, in turn, is the Code section that provides for the recording of conveyances generally, and it places a duty on only the probate court to accept those filings. The arguments before us demonstrate no legal duty to record mortgage assignments.” View "Deutsche Bank National Trust Company, as trustee of any specific residential mortgage-backed security" on Justia Law

Jared Larson appealed a district court judgment foreclosing a mortgage in favor of Heartland State Bank. Larson argued the judgment should have been reversed because Heartland’s notice before foreclosure was legally insufficient. The North Dakota Supreme Court found Larson raised an issue of defective notice during the pendency of the action after Heartland moved to amend its complaint. After reviewing the record, the Supreme Court concluded the defect did not impair Larson’s rights and was not fatal to Heartland’s foreclosure action. Rather than impair Larson’s rights, the Court found the defect benefited him: had he paid the amount due under the notice, the mortgage would have been reinstated under N.D.C.C. 32-19-28 and Heartland would have been required to start the process over to foreclose the mortgage. Because the defect did not impair Larson’s right to reinstate the mortgage, the Supreme Court concluded the district court did not err in granting Heartland’s motion to amend the complaint and motion for summary judgment. Judgment was affirmed. View "Heartland State Bank v. Larson, et al." on Justia Law

Previous opinions in this case were withdrawn. John and Cindy Henderson sued Copper Ridge Homes and First Bank regarding the construction of their new home in Magnolia, Mississippi. The case spiraled into foreclosure proceedings; the trial court granted First Bank’s motion for judicial foreclosure. On appeal, the Hendersons argued the trial court erred in granting First Bank a judicial foreclosure, by granting Copper Ridge’s and First Bank’s motions for summary judgment, and by denying their motions for leave to amend and add wrongful disclosure to their complaint. The Mississippi Supreme Court agreed the trial court erred in granting Copper Ridge’s and First Bank’s post-foreclosure motions for dismissal of the Hendersons’ claims. The Court affirmed the grant of judicial foreclosure, but reversed the grant of summary judgment to both parties, and remanded the case back to the trial court for a determination of the Hendersons’ claims. View "Henderson v. Copper Ridge Homes, LLC" on Justia Law