Justia Banking Opinion Summaries

Under the Housing and Economic Recovery Act of 2008, Pub. L. No. 110-289, 122 Stat. 2654, the Federal Housing Finance Agency (FHFA) became the conservator of Fannie Mae and Freddie Mac. In 2012, FHFA and Treasury adopted the Third Amendment to their stock purchase agreement, which replaced the fixed 10% dividend with a formula by which Fannie and Freddie just paid to Treasury an amount (roughly) equal to their quarterly net worth. Plaintiffs, Fannie Mae and Freddie Mac stockholders, filed suit alleging that FHFA's and Treasury's alteration of the dividend formula through the Third Amendment exceeded their statutory authority under the Recovery Act, and constituted arbitrary and capricious agency action in violation of the Administrative Procedure Act (APA), 5 U.S.C. 706(2)(A). The court held that plaintiffs' statutory claims are barred by the Recovery Act's strict limitation on judicial review; the court rejected most of plaintiffs' common law claims; insofar as the court has subject matter jurisdiction over plaintiffs' common-law claims against Treasury, and Congress has waived the agency's immunity from suit, those claims are also barred by the Recovery Act's limitation on judicial review; in regard to claims against FHFA and the Companies, some are barred because FHFA succeeded to all rights, powers, and privileges of the stockholders under the Recovery Act, and others failed to state a claim upon which relief could be granted; and, as to the remaining claims, which are contract-based claims regarding liquidation preferences and dividend rights, the court remanded for further proceedings. View "Perry Capital LLC v. Mnuchin" on Justia Law

In consolidated cases, the debtors obtained Federal Housing Administration-insured residential mortgage loans and subsequently defaulted due to financial hardship. The law firms represented the loan servicing agents in filing Illinois foreclosure complaints, using the statutory complaint template (Illinois’ Mortgage Foreclosure Law, 735 Ill. Comp. Stat. 5/15-1504(a)), which includes the language: “Names of defendants claimed to be personally liable for deficiency, if any[,]” and, “[a] personal judgment for a deficiency, if sought.” The firms included both allegations, and identified debtors to be personally liable for any deficiency. The debtors filed suit under the Fair Debt Collection Practices Act, 15 U.S.C. 1692, alleging that the FHA does not authorize deficiency judgments where borrowers suffered a financial hardship. They submitted a letter from the FHA responding to a Freedom of Information Act request, stating: There have been zero foreclosed FHA loans in Illinois in which the pursuit of a deficiency judgment was authorized. FHA is not currently pursuing deficiency judgments.” The district court dismissed. The Seventh Circuit affirmed. Debtors did not identify any law, regulation, or FHA policy requiring a mortgagee to obtain authorization from the FHA prior to including the two allegations at issue in their state-foreclosure complaint. View "Zuniga v. Pierce & Associates" on Justia Law

Twelve individuals in the Houston area who receive Section 8 housing assistance filed suit against AmeriPro and Wells Fargo, alleging discrimination in violation of the Equal Credit Opportunity Act (ECOA), 15 U.S.C. 1691 et seq., on the basis of their receipt of public assistance income. The district court granted defendants' Rule 12(b)(6) motion and dismissed the claims. The court concluded that the Wells Fargo Applicants did not plausibly allege that Wells Fargo discriminated against them on the basis of their Section 8 income or failed to consider their Section 8 income in assessing their creditworthiness; the AmeriPro Inquirers did not plausibly allege that they are "applicants" under the ECOA because they did not actually apply for credit with AmeriPro; and the AmeriPro Applicants did not plausibly allege that Wells Fargo was a "creditor" with respect to them. Therefore, the court affirmed as to these claims. The court concluded that the AmeriPro Applicants did plausibly allege violations of the ECOA by alleging that AmeriPro refused to consider their Section 8 income in assessing their creditworthiness as mortgage applicants, and that they received mortgages on less favorable terms and in lesser amounts than they would have had their Section 8 income been considered. Accordingly, the court reversed as to these claims and remanded for further proceedings. View "Alexander v. Ameripro Funding" on Justia Law

This case stems from the simultaneous refinancing of a home equity line of credit by two different lenders in 2006, which resulted in a dispute over the priority of their recorded deeds of trust. On appeal, Bank of New York Melon challenged the dismissal of its suit against Citibank. The court reversed the judgment sustaining Citibank's demurrers to Bank of New York Melon's first and second amended complaints, that alleged all of Bank of New York Melon's causes of action were barred by the three-year statute of limitations in Code of Civil Procedure section 338. The court concluded, however, that Bank of New York Melon has stated a claim for equitable subrogation, which is not subject to the statute. The court considered all other theories in the first and second amended complaint to be variations of that cause of action, rather than independent causes of action, as they assert no independent right for which relief may be granted under California law. The court explained that the claim for equitable subrogation is not subject to the statute and is not time-barred. Therefore, the court reversed and remanded. View "Bank of New York Mellon v. Citibank" on Justia Law

Plaintiffs challenged the dismissal of their pro se complaint that, inter alia, sought a declaration that Chase and U.S. Bank could not foreclose on their home. The district court dismissed certain counts based on lack of subject matter jurisdiction under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), 12 U.S.C. 1821, and other counts for failure to state a claim. The court affirmed, concluding that the district court lacked subject matter jurisdiction over most of the counts (Counts 1, 2, 5-9, and 16-19) that plaintiffs appeal because they failed to exhaust their claims with the FDIC. The court further concluded that the other relevant counts for constructive fraud (Count 14) and negligence (Count 15) failed to state a claim. Finally, the district court did not abuse its discretion by not providing a reason for denying plaintiffs' requests to amend their complaint. View "Willner v. Dimon" on Justia Law

This appeal involves the Bank, Ocwen, and Power Default's attempt to foreclose on property in Grand Prairie, Texas. On appeal, plaintiff challenged the district court's denial of her motion for remand based on its finding that Power Default, a non-diverse defendant and substitute trustee for the attempted foreclosure, was improperly joined in the proceeding because the foreclosure did not take place. The district court concluded that plaintiff had no wrongful foreclosure claim against Power Default absent an actual foreclosure. In this case, because she would have been unable to assert a cause of action against Power Default in state court, the district court found that joinder of Power Default as a defendant was improper. Therefore, the court agreed with the district court's analysis and conclusion denying plaintiff's motion to remand to state court. The court also agreed with the district court's grant of summary judgment to defendants, concluding that plaintiff may not assert a cause of action for wrongful foreclosure. Accordingly, the court affirmed the judgment. View "Foster v. Deutsche Bank National Trust Co." on Justia Law

Plaintiffs Andrew and Kathi Kalnoki (the Kalnokis) appealed a judgment dismissing their second amended complaint for wrongful foreclosure-related causes of action after the trial court sustained the defendants’ demurrers without leave to amend (case No. C073207, the foreclosure appeal). They separately appealed an order after judgment awarding attorney fees to defendants (case No. C075062, the attorney fees appeal), and an order disbursing funds the Kalnokis deposited with the court under Code of Civil Procedure section 1170.5 to delay the trial in an unlawful detainer action filed against them regarding the residential property at issue here (case No. C079144, the rental disbursement appeal). The Court of Appeal consolidated all three appellate cases for argument and decision. Finding that the Kalnokis failed to allege a cause of action on any theory, the Court affirmed the judgments dismissing the second amended complaint with prejudice. The Court also concluded the trial court properly awarded attorney fees. The Court found, however, that the court erred in disbursing to Wells Fargo the rental funds on deposit with the court. The Court therefore reversed the rental disbursement order and order that the funds be returned to the Kalnokis. View "Kalnoki v. First American" on Justia Law

Plaintiff filed suit against Deutsche Bank, seeking a declaratory judgment that the bank's foreclosure of the mortgage on plaintiff's home was invalid and seeking to quiet title to the property. The superior court granted the bank's motion to dismiss. The court concluded, as did the trial court judge, that a foreclosing mortgagee's failure to comply with G. L. c. 244, § 15A, by failing to send the postforeclosure notices required by the statute, does not render the foreclosure void. In this case, where the provision in question does not set forth preforeclosure requirements that are a part of the foreclosure process, the Bank's failure to comply with section 15A's postforeclosure notice provisions did not render the foreclosure void. Accordingly, the court affirmed the judgment. View "Turra v. Deutsche Bank Trust Company Americas" on Justia Law

Plaintiff filed a series of lawsuits challenging Chase's efforts to foreclose upon his real property. In this appeal, plaintiff challenges a judgment of dismissal entered after the trial court sustained the demurrer of Chase. The court concluded that plaintiff failed to state a cause of action for violation of the Homeowners Bill of Rights, lack of standing to foreclose, illegal substitution of trustee, and fraud. The court also concluded that the trial court properly considered the declaration of Chase's counsel, among other things, before denying plaintiff's motion for a preliminary injunction. Finally, the court explained that principles of res judicata are fatal to the present lawsuit and theoretical future lawsuits seeking to vindicate the same primary right. Accordingly, the court affirmed the judgment. View "Gillies v. JPMorgan Chase Bank, N.A." on Justia Law

Plaintiffs’ Indianapolis home had a mortgage serviced by J.P. Morgan Chase. In 2011 plaintiffs accused Chase of paying the wrong homeowner’s insurer using $1,422 from their escrow account. They had switched insurers without telling Chase. When Chase learned of the change, it promptly paid the new insurer and informed plaintiffs that their old insurer would send a refund. Chase told them to forward the refund to replenish the depleted escrow. When the refund came, plaintiffs kept the money. Chase adjusted their mortgage payment to make up the shortfall. When plaintiffs refused to pay the higher amount, the mortgage went into default. Instead of curing, they requested information under the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. 2601–2617, which requires the bank to correct account errors and disclose account information. They demanded that Chase reimburse their escrow. Chase sent a complete account history. Plaintiffs divorced, ending their 25-year marriage. They sued Chase, claiming that its response was inadequate under RESPA and caused more than $300,000 in damages—including the loss of their marriage— and claiming breach of the implied covenant of good faith and fair dealing. The Seventh Circuit affirmed summary judgment for Chase. Chase’s response complied with its RESPA duties. To the extent that any requested information was missing, plaintiffs suffered no actual damages. Nor did Chase breach the duty of good faith and fair dealing, assuming that Indiana would recognize the implied covenant in this context. View "Perron v. J.P. Morgan Chase Bank, N.A." on Justia Law