Justia Banking Opinion Summaries

Debtor appealed from the bankruptcy court's order denying sanctions against the Bank. Although the evidence suggested that the Bank could have been aware of debtor's personal bankruptcy filing, there was no evidence that the Bank had knowledge of the Assignment and the purported transfer of the LLC's assets to him. The replevin action filed by the Bank did not name debtor, individually, and sought only to repossess equipment owned by the LLC in which the Bank had a properly perfected security interest. Consequently, there could be no knowing or deliberate conduct attributed to the Bank in its conduct to enforce its lien against the collateral it believed was owned by the LLC. Absent a showing that the Bank was aware of the Assignment, a willful stay violation could not be found. Because a finding that there has been a willful violation of the automatic stay was a prerequisite to an award of sanctions, the court affirmed the bankruptcy court's denial of sanctions. View "Carter, Jr., et al. v. First National Bank of Crosset" on Justia Law

Plaintiff appealed the district court's grant of summary judgment for defendants on plaintiff's claims arising out of the threatened foreclosure on two residential investment properties he owned. The court concluded that the district court correctly determined that Deutsche Bank was a mortgagee and could proceed with the foreclosure action; as a non-party mortgagor, and without any evidence showing plaintiff to be an intended third-party beneficiary, the court concluded that plaintiff lacked the requisite standing to bring suit to enforce the terms of the Pooling & Services Agreement that governed the assignment of the mortgagor's notes; and the requirement in Tex. Prop. Code 51.0001(3) that the current mortgagee provide the notice required the court also to consider defendants' argument that quasi-estoppel under Texas law precluded plaintiff from challenging GMAC's status as mortgage servicer. The court affirmed the judgment of the district court. View "Farkas v. GMAC Mortgage, L.L.C., et al." on Justia Law

Plaintiffs filed suit against defendant to recover on a promissory note. On appeal, plaintiffs challenged the district court's grant of summary judgment in favor of defendant. The court concluded that, construing the evidence most favorably to plaintiffs, a genuine issue of material fact existed as to whether the primary purpose of the loan was consumer or non-consumer in nature. The district court correctly declined to create a de minimus exception to the no notice rule. The court reversed and remanded. View "Crozier, et al. v. Wint" on Justia Law

Plaintiff was sued by Asset Acceptance, a debt collector, for a debt arising from her purchase of natural gas for household use. She sued, claiming that Asset Acceptance sued after the statute of limitations on the creditor’s claim had run, in violation of the Fair Debt Collection Practices Act, 15 U.S.C. 1692. Plaintiff moved to certify a class of debtors sued, after the limitations period, by Asset Acceptance for debts from sale of natural gas to consumers. The district judge waited 25 months and denied the motion. The class would have 793 members, of whom 343 reside in Illinois; 290 were sued four to five years after the claims accrued and 45 were sued more than five years after accrual. The judge shrank the class to 45, then to 23, ruling that suing to collect a debt but failing to serve the defendant did not violate the Act even if the suit was untimely, and concluded that 23 was too small a number to justify a class action. The Seventh Circuit reversed, finding that all 343 Illinois residents were proper class members because the applicable statute of limitations is four years. Certification need not be limited to Illinois residents or to claims under the federal Act. View "Phillips v. Asset Acceptance, LLC" on Justia Law

A title services company may not pay a real estate agent a fee in exchange for a referral, Real Estate Settlement Procedures Act, 12 U.S.C. 2607(a), with an exemption for “affiliated business arrangements.” The defendants are related title and real estate agency companies and met three prerequisites for the exemption. Home buyers claimed that the defendants fell outside the safe harbor’s coverage because they failed to satisfy a fourth condition announced in a Department of Housing and Urban Development policy statement. The district court held that the policy statement is not binding on the Department, is not otherwise entitled to deference, and does not supplement the Act’s existing safe-harbor conditions. The Sixth Circuit affirmed, holding that the defendants qualify under the exemption for affiliated businesses. View "Carter v. Welles-Bowen Realty, Inc." on Justia Law

In 2006, Plaintiff financed a purchase of residential property. Residential Finance was the lender; Chase serviced the loan. In 2011 Plaintiff sent Chase a “Qualified Written Request” under the Real Estate Settlement Procedures Act, 12 U.S.C. 2605(e), requesting information about the amount owed on the loan, the identity of the “current holder,” the date Chase began servicing the loan, and a breakdown of accrued charges. Plaintiff disputed late fees and other charges and stated that Chase had refused a loan modification for which she qualified and had failed to provide a copy of the Note as requested. Chase sent some material, but stated that any requested information not included was either unavailable or considered proprietary; the letter did not provide the identity of the loan’s owner or information on the correctness of Plaintiff’s account, and did not provide contact information for obtaining assistance. Plaintiff sued, alleging that she made excess payments that Chase failed to credit, violations of the Truth in Lending Act, 15 U.S.C. 1641(f)(2), RESPA, the Ohio Consumer Sales Practices Act, and conversion. Chase finally identified the owner of the loan: Fannie Mae. The district court dismissed. The Sixth Circuit affirmed with respect to TILA, but reversed dismissal of the RESPA claim, finding that Plaintiff adequately alleged causation of damages. View "Marais v. Chase Home Fin., LLC" on Justia Law

The City of Springfield enacted two local ordinances that imposed new legal duties on (1) property owners to maintain property during the foreclosure process and provide a $10,000 cash bond per foreclosure to the City, and (2) mortgagees to attempt a settlement through negotiations before foreclosing. In dispute was the definition of "owner" in the first ordinance, which included mortgagees who were not in possession and had begun the foreclosure process. The ordinance imposed the duties on the mortgagees whether the mortgagors were still in possession. Six banks sued in state court, seeking to have the ordinances invalidated as inconsistent with and preempted by comprehensive state laws governing foreclosure and property maintenance and as inconsistent with state and federal constitutional guarantees. The case was removed to federal district court, which concluded that the ordinances were valid. The banks appealed. The First Circuit Court of Appeals certified dispositive state law questions to the Massachusetts Supreme Judicial Court because the outcome of the case depended on unresolved questions of Massachusetts law and raised significant policy concerns better suited for resolution by that state court. View "Easthampton Savings Bank v. City of Springfield" on Justia Law

Plaintiffs, victims and victims' families and estates, filed suit against Iran and others alleging their liability for the attack on the Khobar Towers apartment complex in Dhahran, Saudi Arabia. Plaintiffs obtained a default judgment and attempted to collect. Plaintiffs had writs of attachment issued to Bank of America and Wells Fargo, seeking any asset held by the banks in which Iran had interest. The banks conceded that some accounts were potentially subject to attachment and these "uncontested accounts" were the subject of an interpleader action in the district court. The remaining "contested accounts" are the subject of this appeal. The court affirmed the order of the district court denying plaintiffs' motion for a turnover of the funds because plaintiffs could not attach the contested accounts under either section 201 of the Terrorism Risk Insurance Act of 2002, Pub. L. No. 107-297, 116 Stat. 2322, 2337, or 28 U.S.C. 1610(g) without an Iranian ownership interest in the accounts and because Iran lacked an ownership interest in the accounts. View "Heiser, et al. v. Islamic Republic of Iran, et al." on Justia Law

In Chapter 11 liquidation of KB Toys Inc. and affiliated entities, the Residual Trustee of the KBTI Trust sought to disallow certain trade claims that ASM (a company in the business of purchasing bankruptcy claims) obtained from creditors. Under 11 U.S.C. 502(d) a claim can be disallowed if a claimant receives property that is avoidable or recoverable by the bankruptcy estate. The Bankruptcy Court disallowed the claims, concluding that a claims purchaser holding a trade claim is subject to the same 502(d) challenge as the original claimant. ASM was on “constructive notice” of potential preference actions, could have discovered the potential for disallowance with “very little due diligence,” and was not entitled to protection as a “good faith” purchaser. The district court and Third Circuit affirmed, holding that a trade claim that is subject to disallowance under502(d) in the hands of the original claimant is similarly disallowable in the hands of a subsequent transferee. View "In re: KB Toys Inc." on Justia Law

MERSCORP operates an online membership organization that records, trades, and forecloses loans on behalf of many lenders. Banks can register their mortgages on the system and assign the mortgages to MERSCORP, which then records them in the counties in which the mortgaged properties are located. MERSCORP has no financial interest in the mortgages. The underlying debts can be repeatedly assigned without transfers being recorded in a public‐records office, facilitating successive interbank sales of mortgages, often to create mortgage‐backed securities. Union County, Illinois filed a class action suit on behalf of all Illinois counties against MERSCORP and banks that do business with MERSCORP, claiming that MERSCORP is violating a statute that requires every Illinois mortgage be recorded; 765 ILCS 5/28 provides that deeds, mortgages, powers of attorney, and other instruments relating to or affecting the title to real estate “shall be recorded in the county in which such real estate is situated.” The district court dismissed, holding that Illinois law does not require that mortgages be recorded, without deciding whether to certify it as a class action. The Seventh Circuit affirmed, declining to certify the issue to the Illinois Supreme Court. View "Union Countyv. Merscorp, Inc." on Justia Law