Justia Banking Opinion Summaries

Loop 101, LLC (“Loop”) borrowed money from MidFirst Bank to construct an office building. The promissory note was secured by a deed of trust, and four individuals guaranteed payment. The note, deed of trust, and gurantees expressly waived the fair market value provision of Ariz. Rev. Stat. 33-814(A). MidFirst assigned its rights under the loan and deed of trust to CSA 13-101 Loop, LLC (“CSA”). After Loop defaulted on the loan, CSA bought the property at a trustee’s sale for a credit bid of $6.15 million. CSA then sued Loop and the guarantors for a deficiency judgment. Loop and the guarantors counterclaimed and filed a third-party claim against MidFirst for breach of the implied covenant of good faith and fair dealing. MidFirst and CSA moved to dismiss, arguing that Loop and the guarantors had waived their right to a fair market value determination. The superior court ruled that parties may not prospectively waive this provision, determined the fair market value of the property to be $12.5 million, and concluded that no deficiency existed. The Supreme Court affirmed, holding that parties may not prospectively waive the fair market value provision of section 33-814(A). View "CSA 13-101 Loop, LLC v. Loop 101, LLC" on Justia Law

Gordon and Carol Lane took out a loan secured by a piece of commercial real estate. John Serpa executed a personal guaranty upon the loan. The Lanes defaulted on their obligation, and Serpa failed to fulfill his guarantor duties. Before the original lender exercised its right to foreclose, the FDIC was appointed its receiver and assigned the interest in the Lanes’ loan to First Financial Bank, N.A. (FFB). FFB foreclosed and sold the property to itself. FFB then brought a deficiency judgment and breach of guaranty action against the Lanes and Serpa (collectively, Respondents). The district court entered judgment in Respondents’ favor under Nev. Rev. Stat. 40.451 because the fair market value of the property exceeded the consideration the FFB paid the FDIC to acquire a lien on the property. The Supreme Court reversed, holding that the definition of “indebtedness” found in section 40.451 does not limit the amount a successor lienholder can recover in an action for a deficiency judgment to the amount of consideration such a lienholder paid to obtain its interest in the note and deed of trust. Remanded. View "First Fin. Bank v. Lane" on Justia Law

In 2011, in response to an increased number of foreclosures, the City of Springfield enacted two ordinances addressing properties left vacant during or after the foreclosure process. The mediation ordinance established a program requiring mandatory mediation between mortgagors and mortgagees. The foreclosure ordinance required owners of buildings that are vacant or undergoing foreclosure to register with the City. Six banks holding mortgage notes on properties in the City (Plaintiffs) filed suit seeking declaratory and injunctive relief from the enforcement of the ordinances. The federal district court allowed the City’s motion for summary judgment. Plaintiffs appealed, and the First Circuit certified two questions to the Supreme Judicial Court. The Court answered (1) the foreclosure statute preempts the mediation ordinance in whole but does not preempt the foreclosure ordinance; (2) the foreclosure ordinance is preempted by the Massachusetts Oil and Hazardous Material Release Prevention Act and the state sanitary code; and (3) the foreclosure ordinance does not impose an unlawful tax in violation of the Constitution of the Commonwealth of Massachusetts. View "Easthampton Savings Bank v. City of Springfield" on Justia Law

The Mortgage Electronic Registration System (MERS) is a national electronic registry that does not originate, assign, or service mortgages, but charges a fee when members record or transfer a mortgage on the registry. Initially, mortgages are recorded with the county recorder and MERS becomes the mortgagee of record. With subsequent transfers, MERS remains the mortgagee of record in county property records, but tracks the transfers for priority purposes on its registry. Transfers of mortgages are not recorded in the county where the property is located. Counties brought a class action, alleging that Lenders violated Minnesota law by allowing mortgagees to circumvent recordation in the counties. The district court dismissed, finding no duty to record a mortgage assignment under Minnesota law. The Eighth Circuit affirmed that the recording statute is not mandatory and declined to certify the question to the Minnesota Supreme Court. View "Ramsey Cnty. v. MERSCORP Holdings, Inc." on Justia Law

In 1994, C. Barr and Joann Schuler subdivided their property, thereby creating the Woodlawn Springs Subdivision. Each phase of development was subject to a Declaration of Covenants, Conditions, and Restrictions (Declarations). The Schulers also incorporated the Woodlawn Springs Homeowners Association, Inc. (Association). The Schulers borrowed money from Your Community Bank, Inc. (Bank) to finance the construction. After the Schulers died, First Bankers Trust Company (First Trust) executed a deed in lieu of foreclosure conveying fifty subdivision lots to the Bank and a written Assignment and Assumption of Developer Rights (Assignment) in favor of the Bank. In 2011, the Association demanded that the Bank pay $15,000 in Association fees on the subdivision lots it acquired. The Bank refused to pay the fees and filed a declaration of rights action. The circuit court granted summary judgment for the Bank. The court of appeals reversed. The Supreme Court reversed, holding that, pursuant to the deed in lieu of foreclosure and the Assignment, the Bank had succeeded to all of the Developer’s rights under the Declarations, and therefore, was exempt from paying the Association fees. View "Your Cmty. Bank, Inc. v. Woodlawn Springs Homeowners Ass’n, Inc." on Justia Law

After a bank acquired an apartment complex by deed in lieu of foreclosure the bank discovered substantial black mold in the units. The bank sued the builder, alleging, inter alia, that the builder breached the implied warranty of workmanlike construction. The district court granted summary judgment to the builder on the implied warranty claim. The court of appeals affirmed. The Supreme Court affirmed, holding that the bank may not recover under the implied warranty of workmanlike construction, as the implied warranty of workmanlike construction does not extend to a lender acquiring apartment buildings by a deed in lieu of foreclosure. View "Luana Savings Bank v. Pro-Build Holdings, Inc." on Justia Law

After foreclosure proceedings were instituted against Petitioners, Petitioners filed an amended class-action complaint against the Federal National Mortgage Association (Fannie Mae), the owner of their mortgage and note, arguing that Fannie Mae was not “authorized to do business” in the state, as required by the Statutory Foreclosure Act, because it had failed to obtain a certificate of authority from the Arkansas Secretary of State. A federal district court certified to the First Circuit the question of whether the Act allows authorization under federal law. The First Circuit answered that the Act does contemplate authorization under federal law and that Fannie Mae’s federal charter was sufficient to allow it to proceed under the statute. View "Dickinson v. SunTrust Nat'l Mortgage Inc." on Justia Law

Plaintiff sought to rescind a loan she entered into with the trustee of a mortgage investment trust, and the district court granted rescission, finding that the mortgaged property was plaintiff's "principal dwelling" and the trustee failed to give plaintiff adequate notice of her right to rescind. In this case, the trustee failed to comply with two requirements of the Truth in Lending Act, 15 U.S.C. 1635, and a related regulation where he instructed plaintiff to sign simultaneously the loan documents and a postdated waiver of her right to rescind the transaction and the trustee failed to give plaintiff two copies of the notice of her right to rescind. The court concluded that the record fairly supports the district court's findings of fact; plaintiff was entitled to rescission because the trustee failed to give plaintiff clear and conspicuous notice of her right to rescind; but the district court lacked the discretion to deny plaintiff statutory damages, attorney's fees, and costs. Accordingly, the court affirmed in part, reversed in part, and remanded for a determination of the amounts owed. View "Harris v. Schonbrun" on Justia Law

The Avakians purchased a house with a loan secured by a properly executed deed of trust. The property was their homestead, where they lived together. Citibank refinanced the loan. Unlike the original loan, the refinancing note only listed Norair as the debtor. Citibank required that the Avakians execute another deed of trust. Norair signed the Citibank deed of trust. The next day, Burnette signed an identical deed of trust. The deeds of trust did not mention each other, and did not refer to signature of counterpart documents. Citibank recorded them as separate instruments. The Avakians received a loan modification. Around the time of Norair’s death, Burnette received notice that Citibank was taking steps to foreclose. After Norair’s death, Burnette sought a declaratory judgment. The district court granted summary judgment to Burnette, finding that, because the two were living together when they signed the Citibank deeds of trust, the instruments were invalid. The Fifth Circuit reversed. Under Mississippi law, a deed of trust on a homestead is void if it is not signed by both spouses, but the Mississippi Supreme Court would likely hold that a valid deed of trust is created when husband and wife contemporaneously sign separate, identical instruments. View "Avakian v. Citibank, N.A." on Justia Law

In the 1950s and ’60s, to encourage private developers to construct, own, and manage housing projects for low- and moderate-income families, the government insured mortgages on those projects in exchange for provisions, such as a 40-year mortgage term, an agreement to maintain affordability restrictions for the duration of the mortgage, and prepayment limitations or prohibitions. The Emergency Low Income Housing Preservation Act of 1987 and the Low-Income Housing Preservation and Resident Homeownership Act of 1990 instituted a process to request the right to prepay mortgages. There were substantive restrictions on HUD granting prepayment requests, limiting its discretion, 12 U.S.C. 4108(a)). Prepayment is one step toward renting at market prices. The Acts permit HUD to grant incentives rather than permission to prepay. Owners claimed that the Acts constituted an as-applied taking. The Claims Court granted the government’s motions: for summary judgment that the takings claims for some properties were unripe for failure to exhaust administrative remedies; for summary judgment that no taking occurred for properties for which mortgages did not include a prepayment right; and for summary judgment of collateral estoppel as to one owner. The Federal Circuit affirmed as to ripeness and prepayment, but reversed as to collateral estoppel. View "Biafora v. United States" on Justia Law