Justia Banking Opinion Summaries

In this foreclosure action, the Supreme Court affirmed the judgment of the intermediate court of appeals (ICA) vacating the circuit court's grant of summary judgment for Nationstar Mortgage, LLC but corrected the ICA's reasoning, holding that the ICA erred in holding that Nationstar's business records were trustworthy under the business records exception to hearsay and that Daniel Kaleoaloha Kanahele's affirmative defenses should have been addressed by the circuit court.After Kanahele defaulted on a loan, Nationstar initiated this foreclosure action. The circuit court issued final judgment in favor of Nationstar. Although the ICA vacated the judgment and remanded for further proceedings, Kanahele asked the Supreme Court to review additional issues he argued were either incorrectly resolved or left unresolved by the ICA. The Supreme Court held that the ICA erred with respect to two issues and that Kanahele would be prejudiced on remand absent the Court's further review. Specifically, the Court held (1) in light of Nationstar's failure adequately to explain material discrepancies in its business records and its presentation of contradictory declarations regarding which of several versions of Kanahele's note was the original, the ICA should have vacated the circuit court's order on this ground as well; and (2) the ICA should have clarified whether Nationstar was subject to Kanahele's affirmative defenses. View "Nationstar Mortgage LLC v. Kanahele" on Justia Law

The Taniguchis obtained a $510,500 home loan, secured by a deed of trust. A 2009 loan modification reduced their monthly payments and deferred until the loan's maturity approximately $116,000 of indebtedness. The modification provided that failure to make modified payments as scheduled would be default so that the modification would be void at the lender’s option. The modification left unchanged the original acceleration clauses and power of sale. The Taniguchis defaulted on the modified loan and were informed that to avoid foreclosure, they would have to pay their four missed payments and associated late charges, foreclosure fees and costs, plus all sums deferred under the modification (about $120,000 in principal, interest and charges). The Taniguchis filed suit. Restoration recorded a notice of trustee’s sale. The Taniguchis obtained a temporary restraining order. The Taniguchis alleged violations of Civil Code section 2924c by demanding excessive amounts to reinstate the loan, unfair competition, breach of contract, and breach of the covenant of good faith and fair dealing. The trial court entered judgment in favor of Restoration. The court of appeal vacated in part. When principal comes due because of a default, section 2924c allows a borrower to cure that default and reinstate the loan by paying the default amount plus fees and expenses. Section 2924c gives the Taniguchis the opportunity to cure by paying the missed modified payments and avoid the demand for immediate payment of the deferred amounts. Nothing in the loan modification suggests that the Taniguchis forfeited that opportunity; section 2924c does not indicate that a forfeiture would be enforceable. View "Taniguchi v. Restoration Homes, LLC" on Justia Law

Plaintiffs brought a putative class action alleging that between 2009 and 2014 certain lenders participated in "kickback schemes" prohibited by the Real Estate Settlement Procedures Act (RESPA). The district court dismissed the claims because the first of the five class actions was filed after the expiration of the one year statute of limitations.The Fourth Circuit reversed and held that, under the allegations set forth in their complaints, plaintiffs were entitled to relief from the limitations period under the fraudulent concealment tolling doctrine. In this case, plaintiffs sufficiently pleaded that the lenders engaged in affirmative acts of concealment and the court could not conclude as a matter of law that these plaintiffs unreasonably failed to discover or investigate the basis of their claims within the limitations period. Accordingly, the court remanded for further proceedings. View "Edmondson v. Eagle National Bank" on Justia Law

The Supreme Court affirmed in part and vacated in part the order of the superior court authorizing a permanent receiver to distribute the proceeds from the sale of 25 Burnside Avenue in Narragansett in accordance with the receiver's recommendations, holding that the order is vacated to the extent that it deducted the entire balance of an outstanding mortgage from Kevin Hunt's share of the proceeds.The property in this case was owned by Kevin and Alice Hunt as tenants by the entirety. After the family court dissolved the Hunts' marriage, Bank scheduled a sale of the property to foreclose upon the mortgage. Alice filed a petition for receivership to protect her equity interests in the property, and the property was placed into temporary judicial receivership. The receiver eventually sold the property and filed a final report and a recommendation on allowance of claims. The superior court entered an order adopting the receiver's recommendations. The Supreme Court held that the superior court justice (1) did not err when he concluded that the net proceeds were to be distributed equally between Kevin and Alice; (2) erred when he attributed the mortgage wholly to Kevin; and (3) did not err by ordering Kevin to pay rent retroactively. View "In re 25 Burnside Avenue, Narragansett, R.I." on Justia Law

The Ninth Circuit reversed the district court's grant of summary judgment for the HOA in an action brought by the bank after the HOA conducted a foreclosure on residential property. Under Nevada law, HOAs are granted a lien with superpriority status on property governed by the association and the portion of the lien with superpriority status consists of the last nine months of unpaid HOA dues and any unpaid maintenance and nuisance abatement charges.Under Bank of America, N.A. v. SFR Invs. Pool 1, LLC, the panel held that the bank's tender of nine months of HOA dues ($423) satisfied the superpriority portion of the HOA's lien. The panel also held that the HOA had no good faith basis for believing that the bank's tender was insufficient. The panel held that Bourne Valley Court Trust v. Wells Fargo Bank, NA, was no longer controlling and rejected the bank's argument that the Nevada HOA lien statute violated the Due Process Clause, in light of SFR Invs. Pool 1, LLC v. Bank of N.Y. Mellon. The panel held that Nev. Rev. Stat. 116.3116 et seq. was not facially unconstitutional on the basis of an impermissible opt-in scheme, and the bank received actual notice in this case. Finally, the panel agreed with Nevada precedent that Nev. Rev. Stat. 116.3116 et seq. was not preempted by the federal mortgage insurance program. View "Bank of America v. Arlington West Twilight Homeowners Assoc." on Justia Law

Walter Ward took out a secured loan in 2007 without indicating whether he signed the deed of trust (DOT) conveying his property to the lender in his individual capacity or in his capacity as sole trustee of the trust in which his property was held. That DOT was never recorded. Years later, the lender's successor, JPMorgan Chase Bank, N.A. (Chase) asked for a replacement to foreclose. Walter refused, prompting Chase to sue. The trial court sustained two general demurrers to Chase's complaint, entered a judgment of dismissal, and awarded contractual attorney fees and costs to Walter's son, David Ward, the successor trustee of the trust that held the property. The issue this case presented for the Court of Appeal's review centered on whether Chase could reframe its action by amendment to omit a fatal allegation in its original complaint. Because the Court conclude it could, notwithstanding the sham pleading doctrine, the court should have granted leave to amend. Accordingly, we reverse the judgment and the postjudgment order and direct the court to enter a new order sustaining the general demurrers with leave to amend. View "JPMorgan Chase Bank, N.A. v. Ward" on Justia Law

James and Beryl Wicker signed a mortgage agreement for their residence in Punxsutawney, Pennsylvania in favor of Countrywide Bank, FSB (Countrywide) in February 2008. The mortgage agreement indicated that Mortgage Electronic Registration Systems, Inc. (MERS) would act as nominee for Countrywide and its successors and assigns and was designated as the mortgagee. In an assignment of mortgage recorded in November 2011, MERS, as nominee for Countrywide, assigned the mortgage to Bank of America. In May 2012, Bank of America filed a mortgage foreclosure action against the Wickers alleging that the Wickers defaulted on their mortgage as of September 1, 2010. It further averred that it had provided the Wickers with the statutorily required foreclosure notice on September 21, 2011. Bank of America then moved for summary judgment, which the trial court granted in part and denied in part. In so doing, the trial court narrowed the issues for trial to determining whether Bank of America had provided proof of: (1) the required foreclosure notices; (2) the date of default; and (3) the amount of indebtedness. The Pennsylvania Supreme Court granted review to consider the application of Pennsylvania’s business records exception to the rule against hearsay, pursuant to Pennsylvania Rule of Evidence 803(6) and the Uniform Business Records as Evidence Act, 42 Pa.C.S. 6108. The parties agreed that then-current Pennsylvania precedent allowed a records custodian to authenticate documents even if the witness did not personally record the specific information in the documents. The parties disagreed, however, as to whether a records custodian could lay a foundation for documents incorporated into the files of the custodian’s employer when the information in the documents was recorded by a third party, a process which was allowed under the similar but not identical Federal Rule of Evidence 803(6), pursuant to the so-called adopted business records doctrine. The Supreme Court affirmed the Superior Court in concluding that the trial court did not abuse its discretion in allowing the testimony of the records custodian and admitting the documents under the facts of this case. View "Bayview Loan v. Wicker" on Justia Law

The McCarthy law firm was hired to carry out a nonjudicial foreclosure on Obduskey’s Colorado home. Obduskey invoked the Fair Debt Collection Practices Act (FDCPA) provision, 15 U.S.C. 1692g(b), providing that if a consumer disputes the amount of a debt, a “debt collector” must “cease collection” until it “obtains verification of the debt” and mails a copy to the debtor. Instead, McCarthy initiated a nonjudicial foreclosure action.The Tenth Circuit and Supreme Court affirmed the dismissal of Obduskey’s suit, holding that McCarthy was not a “debt collector.” A business engaged in only nonjudicial foreclosure proceedings is not a “debt collector” under the FDCPA, except for the limited purpose of section 1692f(6). The FDCPA defines “debt collector” an “any person . . . in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts.” The limited-purpose definition states that “[f]or the purpose of section 1692f(6) . . . [the] term [debt collector] also includes any person . . . in any business the principal purpose of which is the enforcement of security interests.” McCarthy, in enforcing security interests, is subject to the specific prohibitions contained in 1692f(6) but is not subject to the FDCPA’s main coverage. Congress may have chosen to treat security-interest enforcement differently from ordinary debt collection to avoid conflicts with state nonjudicial foreclosure schemes; this reading is supported by legislative history, which suggests that the present language was a compromise between totally excluding security-interest enforcement and treating it like ordinary debt collection. View "Obduskey v. McCarthy & Holthus LLP" on Justia Law

The Supreme Judicial Court vacated the judgment of the superior court in favor of Matthew Needham on a foreclosure complaint filed by Wilmington Savings Fund Society as Trustee for Hilldale Trust (Wilmington) and remanded the matter for entry of judgment for Wilmington, holding a mortgagee may delegate to an agent its duty to provide a notice of the right to cure pursuant to Me. Rev. Stat. 14, 6111(1).After Needham defaulted on his loan, loan servicer BSI Financial Services sent Needham a notice of the right to cure on behalf of Ventures Trust, the then-holder of the note and mortgage. Thereafter, Ventures Trust filed a foreclosure complaint. Wilmington, which was assigned the mortgage and note, was subsequently substituted as Plaintiff. The trial court entered judgment for Needham, concluding that because the notice was sent by the loan servicer rather than the mortgagee, the notice was insufficient to satisfy the requirements of section 6111. The Supreme Judicial Court disagreed, holding that neither the mortgage contract nor Me. Rev. Stat. 6111(1) prohibited the mortgagee from delegating to an agent loan servicer its duty to give a notice of the right to cure to Needham. View "Wilmington Savings Fund Society, FSB v. Needham" on Justia Law

The Supreme Court reversed the district court's judgment determining that a foreclosure sale extinguished a bank's deed of trust when an homeowner's association (HOA) agent told a deed of trust beneficiary's agent that it would reject a superpriority tender if made, holding that such a representation excludes the formal requirement of making a formal tender sufficient to preserve the first deed of trust under Bank of America, N.A. v. SFR Investments Pool 1, LLC, 427 P.3d 113 (2018).Here, the HOA told the deed of trust beneficiary that it would reject a superpriority tender if made. The district court ruled that the foreclosure sale extinguished Bank’s deed of trust and that the HOA's offer was insufficient to constitute a tender. The Supreme Court reversed, holding (1) an offer to make a payment at some point in the future cannot constitute a valid tender; (2) a formal tender is excused when the party entitled to payment represents that if a tender is made, it will be rejected; and (3) the deed of trust beneficiary’s agent was excused from making a formal tender in this case, and therefore, the foreclosure sale did not extinguish the first deed of trust. View "Bank of America, N.A. v. Thomas Jessup, LLC Series VII" on Justia Law