Justia Banking Opinion Summaries

On April 12, 2010, U.S. Bank National Association initiated a summary process action against Defendant, seeking to evict him from property he owned following the property’s sale to the Bank at a foreclosure auction. On May 25, 2012, a judge entered judgment in favor of the Bank for possession. Defendant appealed, arguing that the foreclosure sale was void because the notice of his right to cure a default did not satisfy the provisions of Mass. Gen. Laws ch. 244, 35A, which gives a mortgagor of residential real property a ninety-day right to cure a payment of default before foreclosure proceedings may be commenced. The Supreme Judicial Court affirmed, holding (1) section 35A is not one of the statutes relating to the foreclosure of mortgages by the exercise of a power of sale, and (2) that being the case, and given the deficiencies in the steps Defendant took to obtain relief, Defendant was precluded from challenging the Bank’s compliance with section 35A in this summary process action.View "U.S. Bank Nat’l Ass’n v. Schumacher" on Justia Law

Defendant pleaded guilty to two counts of conspiracy to engage in prohibited monetary transactions in property for his part in the purchase of two parcels of real property with fraudulently obtained loans. The district court ordered Defendant to pay $615,935 in restitution to JP Morgan Chase, a loan purchaser, and $329,767 in restitution to CitiGroup, a loan originator. Defendant appealed the restitution order. The Ninth Circuit (1) affirmed the district court’s determination that the requirements of the Mandatory Victim Restitution Act were met in this case; (2) affirmed the calculation of restitution owed to CitiGroup; and (3) vacated and remanded for the district court to recalculate the amount owed to Chase because the court applied a formula for a loan originator, although Chase had purchased the loans. View "United States v. Luis" on Justia Law

In 2009, Scott Schulte and Marisel Del Valle (together, Appellants) executed a promissory note and, as security for the note, a mortgage on real property. The note and mortgage were later assigned to BAC Home Loans Servicing. In 2010, BAC filed a foreclosure petition alleging Appellants were in default, and the district court entered a decree of foreclosure. In 2012, Bank of America, as successor by merger to BAC, filed a notice of rescission of foreclosure and, contemporaneously, filed a motion to set aside decree. Appellants opposed the motion to set aside decree, arguing that neither the motion nor the notices of rescission were timely filed within one year of the entry of judgment as required by Iowa R. Civ. P. 1.1012 and 1.1013 and were therefore time barred. The district court found the rescission notices timely filed, concluding that a two-year limitations period applied under Iowa Code 654.17, and accordingly, granted Bank of America’s motion to set aside the decree. The Supreme Court affirmed, holding that the district court did not err when it confirmed that the rescission action was timely filed and granted the motion to set aside decree. View "Bank of Am., N.A. v. Schulte" on Justia Law

Defendants executed a promissory note in favor of FirstMerit Bank secured by a mortgage on several parcels of real estate. After Defendants defaulted on the promissory note, FirstBank initiated foreclosure proceedings. The common pleas court entered a decree in foreclosure, and the properties were sold at auction. Because the sale of the properties resulted in a deficiency, FirstMerit obtained a cognovit judgment against Defendants. Defendants moved for relief from judgment pursuant to Ohio R. Civ. P. 60(B), asserting as a defense that they had reached an oral settlement agreement with FirstMerit under which FirstMerit had agreed to cease legal proceedings and release Defendants from their obligations. The trial court denied the motion, concluding that the statute of frauds barred their defense. The appellate court reversed, determining that Ohio Rev. Code 1335.05 did not prohibit Defendants from raising as a defense that the parties orally agreed to modify the terms of their agreement. The Supreme Court reversed, holding that the oral agreement in this case fell within the statute of frauds, and therefore, Defendants were precluded from raising the agreement as a defense in a motion for relief from judgment.View "FirstMerit Bank, N.A. v. Inks" on Justia Law

Developer obtained a loan from Bank to construct a commercial and condominium project. Bank secured its loan with two deeds of trust, the first of which attached before construction began on the project. Developer failed to pay the general contractor (Contractor) several million dollars for the project, and after Developer had sold many of the units, Contractor recorded a mechanics’ lien against the project. Contractor then sought to foreclose on its lien against Developer, the unit owners, and their lenders. The Owners and Lenders contested the foreclosure, arguing that they were equitably subrogated to Bank’s first deed of trust and thus had priority over Contractor’s mechanics’ lien. The trial court concluded that Contractor’s lien had priority. The Supreme Court reversed, holding (1) Ariz. Rev. Stat. 33-992(A), which gives mechanics’ liens priority over liens recorded after construction begins on real property, does not preclude assignment by equitable subrogation of lien that attached before construction began on the project; and (2) when a single mortgage burdens multiple parcels, a third party may be entitled to equitable subrogation when that party has paid a pro rata amount of the obligation and obtained a full release of the parcel at issue from the mortgage. Remanded. View "Weitz Co., LLC v. Heth" on Justia Law

The Debtors were account holders at Wells Fargo. When Wells Fargo discovered that the Debtors had filed a voluntary Chapter 7 bankruptcy petition, it placed a “temporary administrative pledge” on their accounts and requested instructions from the Chapter 7 trustee regarding the distribution of account funds, a portion of which the Debtors claimed as exempt under Nevada Revised Statutes 21.090(1)(g). The Debtors brought an adversary proceeding, which the bankruptcy court dismissed. The district court affirmed, holding that they did not state a claim for a willful violation of 11 U.S.C. 362(a)(3), which prohibits “any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate.” Before the account funds revested in the Debtors, they remained estate property, and the Debtors had no right to possess or control them. The administrative pledge could cause the Debtors no injury before the account funds revested. After the account funds revested in the Debtors, they lost their status as estate property and thus were no longer subject to section 362(a)(3). View "In re: Mwangi" on Justia Law

To secure a loan, Plaintiff executed a promissory note naming ABN AMRO Mortgage Group (ABN) as the note holder. ABN later merged with CitiMortgage, Inc., which became the holder of Plaintiff’s note. CitiMortgage notified Plaintiff that her balloon payment was due and that she could either make the payment or exercise her “reset option.” Plaintiff did not notify CitiMortgage of her intent to exercise the reset option and did not make the payment. The property was foreclosed. CitiMortgage purchased the property and conveyed it to Federal National Mortgage Association (FNMA). Plaintiff filed a complaint against FNMA and CitiMortgage (Defendants). Plaintiff then moved for partial summary judgment, asserting that no evidence of the transfer of the note from ABN to CitiMortgage had been produced during discovery. Defendants subsequently produced a copy of the certificate of merger between ABN and CitiMortgage. The district court granted summary judgment for Defendants, concluding that the untimely disclosure was harmless. The Supreme Court affirmed, holding (1) the district court did not abuse its discretion by declining to impose sanctions against Defendants for discovery violations; and (2) the clause requiring Plaintiff to give written notice of her intent to exercise the reset option was not an unenforceable contract of adhesion or a violation of the Montana Consumer Protection Act.View "Doherty v. Fed. Nat’l Mortgage Ass’n" on Justia Law

In 2008-2009 Scalzo was a bank officer at two institutions. He originated and approved loans for unqualified borrowers without adequate financial information or collateral. He forged borrowers’ signatures, redirected funds from the loans to his own personal use without the knowledge of the borrowers, and took funds from some fraudulent loans to pay off balances on previous fraudulent loans, to conceal the original fraud. Scalzo pled guilty to one count of bank fraud, 18 U.S.C. 1344, and one count of money laundering, 18 U.S.C. 1956. The Information listed as part of the scheme six bank loans and three Credit Union loans. Scalzo objected to inclusion of two Credit Union loans in the restitution order. The sentencing range was the same with or without these loans, so the court deferred ruling on restitution and sentenced Scalzo to 35 months of imprisonment. The government filed its additional brief a week later. Having received no additional briefing from Scalzo for 82 days, the court relied on the PSR, the plea agreement and the government’s additional submissions; found that Scalzo arranged the Credit Union loans to conceal the bank fraud; noted that the Credit Union loans were listed as part of the fraudulent scheme detailed in the Information to which Scalzo pled guilty and that the Credit Union lost a substantial amount of money; and ordered him to pay restitution of $679,737.23. The Seventh Circuit affirmed. View "United States v. Scalzo" on Justia Law

The official liquidator of Palm Beach Funds filed suit against U.S. Bank for aiding and abetting a breach of fiduciary duty, willful and wanton negligence, and gross negligence. The claims arose from the Palm Beach Funds' investment through accounts maintained at U.S. Bank in what turned out to be a Ponzi scheme. The court affirmed the district court's dismissal of the amended complaint where the liquidator has not stated a plausible claim that U.S. Bank knew of and substantially supported a breach of fiduciary duty. Further, in regard to the negligence claims, the liquidator failed to allege that U.S. Bank had a duty to provide information to the Palm Beach Funds about the flow of funds in and out of the collateral account. View "Varga v. U.S. Bank Nat'l Assoc." on Justia Law

Defendant guaranteed loans made by Regions Bank to certain entities that later defaulted on the obligations. As part of a restructuring agreement, Defendant executed a forbearance agreement and waived “any and all claims, defenses and causes of action” in exchange for Regions Bank’s agreement not to exercise collection remedies under the loan documents. The LC Entities later defaulted on their obligations under the forbearance agreement. Plaintiff subsequently purchased Regions Bank’s interest in the LC Entities’ loans. Plaintiff then sought recovery of the indebtedness from Defendant. The trial court entered judgment for Defendant, concluding that Regions Bank had procured her guaranty in violation of the Equal Credit Opportunity Act (ECOA) and that this violation constituted an affirmative defense. The court of appeals affirmed. The Supreme Court reversed, holding that, in executing the forbearance agreement, Defendant waived her potential claims against the lender, including those under the ECOA, in exchange for leniency in repaying the debt. Remanded. View "RL Regi N.C., LLC v. Lighthouse Cove, LLC" on Justia Law