Justia Banking Opinion Summaries

Appellants Heang Ouch and Morcos Hanna sought to represent a putative class of borrowers who had not kept up with their mortgage loan payments. The borrowers’ loan servicers made a number of contractually-mandated advances (dubbed “delinquency advances”) of funds to the holders of the notes. The loan servicers also, as agents of the holders of the notes, initiated foreclosure proceedings against the borrowers. The borrowers filed separate suits arguing that, despite their non-payment, the servicers’ delinquency advances constituted payments on the borrowers’ debts, that their mortgages were not in default and, accordingly, that the mortgage-holders lacked the power to foreclose. The district court concluded that the services’ payments were not made “on behalf of” the borrowers. The First Circuit consolidated Ouch’s and Hanna’s appeals and affirmed the district court’s rulings denying an amendment to Ouch’s complaint and dismissing Hanna’s complaint with prejudice, holding that the district court did not err in concluding that the payments were not made “on behalf of” the borrowers. View "Ouch v. Fed. Nat’l Mortgage Ass’n" on Justia Law

Junior creditor Car-X Associates Corporation sued a mortgagee to foreclose on a lien. In addition to the mortgagee, Car-X’s complaint named senior creditor Huntington National Bank as a defendant to answer as to any interest it may have in the real estate. When Huntington failed to timely respond to the complaint and summons Car-X obtained a default judgment against Huntington. Huntington moved to set aside the default judgment under Indiana Trial Rule 60(B)(1) because of its excusable neglect and under Indiana Trial Rule 60(B)(8) because such relief would be just and equitable under the circumstances. The trial court denied the motion. The Supreme Court (1) affirmed the trial court’s denial of Huntington’s motion to set aside the default judgment for excusable neglect; but (2) remanded to the trial court to reconsider whether equitable reasons support granting Huntington’s motion under Trial Rule 60(B)(8), especially in light of Huntington’s meritorious defense to the underlying foreclosure suit, the substantial amount of money involved, and Car-X’s lack of prejudice from the delay. View "Huntington Nat’l Bank v. Car-X Assocs. Corp." on Justia Law

This case arose out of a failed development project undertaken by BRN Development, Inc. in Coeur d’Alene. The project was for the development of a high-end 325-unit residential and golf course community on the west side of Lake Coeur d'Alene known as "Black Rock North." American Bank was the lender for this project. The Bank ultimately brought a foreclosure action against BRN. BRN brought a cross-claim against Taylor Engineering, Inc., alleging negligence for its role in the development. Taylor recorded a lien against the development. BRN defaulted on the loan, and the Bank named BRN, Taylor, and any other entity claiming an interest in the development. Taylor made a demand on BRN for payment for services rendered. The demand stated that Taylor would "complete the necessary documents" and request the necessary signatures from the local government entities involved in the final PUD approval. Taylor advised BRN that "if the final subdivision approval is not completed and recorded by May 29, 2009, the PUD and preliminary plat approval will expire, the PUD and plat will not vest in the recorded ownership to the real property involved, and the property will revert to its prior zoning and density." This statement was erroneous; it was undisputed that the final plat did not need to be recorded by May 29 in order to vest the PUD. In BRN's cross-claim against Taylor, it alleged professional negligence, negligent and intentional misrepresentation, and failure to disclose based on the erroneous statement Taylor made in its demand letter. The district court separated the claims between Taylor and BRN from the remainder of the American Bank litigation and ultimately held that Taylor was not liable to BRN. BRN appealed. The Supreme Court found no reversible error with the district court's judgment that BRN failed to meet its burden of proving its claims against Taylor, and affirmed that court's judgment. View "American Bank v. BRN Dev." on Justia Law

Defendants executed a note and mortgage deed in favor of a third party, and after several transactions, all rights created by the instruments were assigned to Wells Fargo Bank, N.A. Defendants later defaulted, and Wells Fargo initiated this action for foreclosure. Defendants moved for summary judgment, asserting that the notice of default issued by Wells Fargo did not comply with Me. Rev. Stat. 14, 6111. The district court granted Defendants’ motion and entered summary judgment for them. In that same order, the court dismissed the foreclosure action without prejudice. The court then amended its previous order so that summary judgment was granted “in part.” The Supreme Judicial Court vacated the court’s orders of partial summary judgment and dismissal of the foreclosure action, holding that the trial court erred by granting less than full summary judgment and by dismissing the foreclosure action without prejudice. Remanded for reinstatement of the initial entry of full summary judgment in favor of Defendants. View "Wells Fargo Bank, N.A. v. Girouard" on Justia Law

In 2008, plaintiffs obtained a loan from Quicken and granted a mortgage on their property to Quicken’s nominee, Mortgage Electronic Registration Systems, “MERS.” The note and mortgage ultimately were conveyed to Bank of America. Plaintiffs defaulted. Bank of America foreclosed by advertisement under Mich. Comp. Laws 600.3201. The Federal Home Loan Mortgage Corporation, “Freddie Mac,” purchased the property at a foreclosure sale. The plaintiffs did not exercise their “equity of redemption” within the six-month statutory redemption period under Michigan law. Freddie Mac initiated eviction. In their counter-complaint, plaintiffs argued that the foreclosure was fraudulent and violated Michigan law because there was no chain of title evidencing ownership by Bank of America, which, therefore, did not have standing to foreclose; Freddie Mac was negligent for failing to evaluate plaintiffs’ loan under the Home Affordable Modification Program; the foreclosure and subsequent eviction were “wrongful” under Michigan law; and Freddie Mac violated their due process rights because its status as a government actor precluded foreclosure by advertisement. The Sixth Circuit affirmed dismissal of plaintiffs’ claims, reasoning that any negligence was not attributable to Freddie Mac and compliance with Michigan’s foreclosure-by-advertisement procedures satisfied the requirements of the Due Process Clause. View "Rush v. Freddie Mac" on Justia Law

In 2003, Marie Borchers purchased the home at the heart of this controversy from Cammie Strawn. Cammie acquired the home, by deed, from her then-husband, Richard Strawn. Richard Strawn had previously given a mortgage to Regions Bank to secure a line of credit. At the time that the house was sold to Marie Borchers, there was an outstanding balance. On the day of closing, Marie Borchers' attorney had an employee deliver a payoff check and a mortgage satisfaction transmittal letter to Regions Bank. The check had the words "Payoff of first mortgage" typed on it. Regions Bank applied the check to the line of credit debt bringing its balance to zero; however, Regions Bank did not satisfy the mortgage. Instead, Regions Bank provided Richard Strawn with new checks on the line of credit even though the public record reflected that Richard Strawn had not owned the property for more than two years. Richard Strawn accrued new debt in excess of $72,000. Regions Bank attempted to collect Strawn's debt by foreclosing on the Borchers' home. The Borchers counterclaimed seeking to recover damages from Regions Bank pursuant to section 29-3-320 of the South Carolina Code based on the bank's failure to enter satisfaction of the mortgage within the three-month time period required by section 29-3-310. The trial court granted the Borchers' motion. Citing admissions from Regions Bank employees, the trial court concluded that based on "these admissions by the Bank it is clear that the closing day payoff should have been processed as a payoff instead of a paydown and that the bank should have had the mortgage satisfied of record." Additionally, the court specifically cited section 29-3-320 and its imposition of liability for mortgage lenders that do not satisfy mortgages within three months after payoff. Regions Bank appealed, and the Court of Appeals affirmed. Finding no reversible error, the Supreme Court also affirmed. View "Regions Bank v. Strawn" on Justia Law

Mortgage Electronic Registration Systems (MERS) is a national electronic loan registry system that permits its members to transfer, among themselves, promissory notes associated with mortgages, while MERS remains the mortgagee of record in public records as “nominee” for the note holder and its successors and assigns. MERS facilitates the secondary market for mortgages by permitting members to transfer the right to repayment pursuant to the terms of the promissory note, recording such transfers in the MERS database to notify one another and establish priority, instead of recording such transfers as mortgage assignments in local land recording offices. It permits note holders to avoid recording fees. Recorders of deeds in Pennsylvania counties sued, seeking an injunction, and to recover millions of dollars in unpaid recording fees, contending that the MERS entities violated 21 Pa. Cons. Stat. 351. The Third Circuit rejected the claims, holding that section 351 does not create a duty to record all land conveyances and is so clear that certification to the Supreme Court of Pennsylvania was unnecessary. The transfers of promissory notes among MERS members do not constitute assignments of the mortgage itself. View "Cnty. of Montgomery Recorder v. MERSCorp Inc" on Justia Law

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