Justia Banking Opinion Summaries

After plaintiff began missing loan payments on a house she bought in Long Beach, ReconTrust initiated a non-judicial foreclosure. In this case, the lender was Countrywide, the borrower was plaintiff and the trustee was ReconTrust. Plaintiff subsequently filed suit alleging that ReconTrust violated the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692e(2)(A), by sending her notices that misrepresented the amount of debt she owed. Plaintiff also sought to rescind her mortgage transaction under the Truth in Lending Act (TILA), 15 U.S.C. 1635(a), on the ground that defendants had perpetrated fraud against her. The district court twice dismissed plaintiff's rescission claim without prejudice and then granted ReconTrust's motion to dismiss the FDCPA claims. The court held that actions taken to facilitate a non-judicial foreclosure, such as sending the notice of default and notice of sale, are not attempts to collect “debt” as that term is defined by the FDCPA; the court's holding affirms Hulse v. Ocwen Federal Bank; the court acknowledged that the Fourth and Sixth Circuit declined to follow Hulse; and the notices at issue in this case didn’t request payment from plaintiff, they merely informed plaintiff that the foreclosure process had begun and explained the foreclosure timeline. Therefore, the court affirmed the dismissal of the FDCPA claim. The court also concluded where, as here, the district court dismisses a claim and instructs the plaintiff not to refile the claim unless he includes certain additional allegations that the plaintiff is unable or unwilling to make, the dismissed claim is preserved for appeal even if not repleaded. Therefore, the court remanded to the district court to consider plaintiff's TILA rescission claim in light of Merritt v. Countrywide Fin. Corp. View "Vien-Phoung Thi Ho v. ReconTrust Co." on Justia Law

In the Dodd-Frank Act of 2010, 12 U.S.C. 5491, Congress established a new independent agency, the Consumer Financial Protection Bureau (CFPB), an independent agency headed not by a multi-member commission but rather by a single Director. PHH is a mortgage lender that was the subject of a CFPB enforcement action that resulted in a $109 million order against it. PHH seeks to vacate the order, arguing that the CFPB’s status as an independent agency headed by a single Director violates Article II of the Constitution. The court concluded that CFPB’s concentration of enormous executive power in a single, unaccountable, unchecked Director not only departs from settled historical practice, but also poses a far greater risk of arbitrary decisionmaking and abuse of power, and a far greater threat to individual liberty, than does a multi-member independent agency. The court noted that this new agency lacks that critical check and structural constitutional protection, yet wields vast power over the U.S. economy. The court concluded that, in light of the consistent historical practice under which independent agencies have been headed by multiple commissioners or board members, and in light of the threat to individual liberty posed by a single-Director independent agency, Humphrey’s Executor v. United States cannot be stretched to cover this novel agency structure. Therefore, the court held that the CFPB is unconstitutionally structured. To remedy the constitutional flaw, the court followed the Supreme Court’s precedents and simply severed the statute’s unconstitutional for-cause provision from the remainder of the statute. With the for-cause provision severed, the court explained that the President now will have the power to remove the Director at will, and to supervise and direct the Director. Because the CFPB as remedied will continue operating, the court addressed the statutory issues raised by PHH and agreed with PHH that Section 8 of the Act allows captive reinsurance arrangements so long as the amount paid by the mortgage insurer for the reinsurance does not exceed the reasonable market value of the reinsurance; CFPB’s order against PHH violated bedrock principles of due process; and the CFPB on remand still will have an opportunity to demonstrate that the relevant mortgage insurers in fact paid more than reasonable market value to the PHH-affiliated reinsurer for reinsurance, thereby making disguised payments for referrals in contravention of Section 8. Accordingly, the court granted the petition for review, vacated the order, and remanded for further proceedings. View "PHH Corp. v. CFPB" on Justia Law

Bank brought this foreclosure action against Mortgagor. Mortgagor filed a motion for summary judgment, arguing that Bank’s notices of right to cure were deficient because they did not satisfy the requirements of Me. Rev. Stat. 14, 6111(1-A). The court concluded that the notice of right to cure did not comply with statutory requirements and dismissed the complaint without prejudice so that Bank could send notice in compliance with section 6111. The Supreme Judicial Court affirmed the dismissal of the complaint but remanded with instructions to correct the order so that it provides for a dismissal with prejudice, holding that the court erred by stating that the dismissal was without prejudice because the dismissal was an adjudication on the merits, and therefore, it was with prejudice. View "U.S. Bank Trust, N.A. v. Mackenzie" on Justia Law

Following his arrest for illegal drug activity, Petitioner was released on bond and withdrew all of the money contained in two bank accounts. Law enforcement traced the money to Petitioner’s sister’s bank account and seized the bank account. Less than ninety days after the conclusion of Petitioner’s criminal proceedings, the Department of Finance of Montgomery County filed a complaint petition for currency forfeiture as to the sister’s bank account. Petitioner’s sister argued that her bank account was not “money” under Maryland's forfeiture statute and that the complaint for forfeiture was untimely filed. The circuit court rejected that argument and ultimately found that the funds in the bank account constituted illegal drug proceeds. The court, therefore, granted forfeiture of the entire amount. The Court of Special Appeals affirmed. The Court of Appeals affirmed, holding (1) the funds contained in a bank account are “money” for purposes of the forfeiture statute; and (2) the forfeiting authority timely filed the complaint for forfeiture of the bank account within the deadline applicable to the filing of a complaint for forfeiture of money. View "Bottini v. Dep’t of Finance, Montgomery County" on Justia Law

Plaintiff filed suit for damages in connection with a $66,500 loan secured by a deed of trust on her house. Plaintiff alleged that, in the administration of and collection efforts on the loan, defendants violated the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692 et seq.; the Truth in Lending Act (TILA), 15 U.S.C. 1601 et seq.; and the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. 2601 et seq. The district court dismissed plaintiff's FDCPA and TILA claims and, following discovery, granted Wells Fargo’s motion for summary judgment on her RESPA claim. The court concluded that plaintiff adequately alleged that the White Firm and the Substitute Trustees were “debt collectors,” as that term is used in the FDCPA. Therefore, the court reversed the order of dismissal of her FDCPA claims against them and remanded for further proceedings, without suggesting whether or not those defendants violated the FDCPA. The court affirmed as to the TILA claims. View "McCray v. Federal Home Loan Mortgage Corp." on Justia Law

Under Regulation X, 12 C.F. R. part 1024, which implements the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. 2601 et seq., a loan servicer’s duty to evaluate a borrower’s loss mitigation application is triggered only when the borrower submits the application more than 37 days before the foreclosure sale. At issue is whether Ocwen, a loan servicer, had a duty to evaluate an application for loss mitigation options submitted by the Borrowers when, at the time the application was submitted, a foreclosure sale of the Borrowers’ property was scheduled to occur in two days. The court concluded that Regulation X requires the court to measure the timeliness of the Borrowers’ application using the date the foreclosure sale was scheduled to occur when they submitted their complete application. Because the Borrowers’ application was untimely, the court agreed with the district court that Ocwen had no duty to evaluate the Borrowers’ loss mitigation application. Therefore, the court affirmed the district court’s grant of summary judgment to Ocwen on the Borrowers’ claim seeking to hold Ocwen liable for failing to evaluate their loss mitigation application. The court also affirmed the district court’s grant of summary judgment with respect to the Borrowers’ claim based on Ocwen’s inadequate response to their notice of error. The court agreed with the district court that to survive summary judgment the Borrowers had to present evidence that they suffered actual damages or were entitled to statutory damages and that they failed to do so. View "Lage v. Ocwen Loan Servicing LLC" on Justia Law

New York law required CitiMortgage to file within 30 days a certificate of discharge with the county clerk to record that plaintiff had satisfied his mortgage. N.Y. Real Prop. Law 275; N.Y. Real Prop. Acts. Law 1921. When CitiMortgage failed to record the satisfaction of the mortgage until more than 90 days after the date of satisfaction, plaintiff filed a putative class action against CitiMortgage. The district court dismissed plaintiff's complaint. The court agreed with CitiMortgage that plaintiff lacks standing to maintain this action. The court dismissed the appeal for lack of jurisdiction because plaintiff has not alleged that CitiMortgage's violation of New York law caused or could cause him any harm. View "Nicklaw v. CitiMortgage, Inc." on Justia Law

In 2007, the Diedrichs executed a mortgage note. Ocwen began foreclosure proceedings in 2010. The Diedrichs entered into a loan modification agreement in 2011. After the Diedrichs began making payments pursuant to that agreement, they became concerned about whether their escrow account was being correctly administered and whether they were being charged improper fees. On February 22, 2013, the Diedrichs sent Ocwen a letter, requesting standard information about their account including the names of employees working on their account, the history of payments from their escrow account, and a statement of interest rates, as permitted by the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. 2605(e)(1)(B). On March 7, Ocwen responded with a form letter, setting forth Ocwen policies regarding information requests; another later, dated March 30, stated that Ocwen would take another 15 days, as permitted by RESPA, to review the inquiry. On April 22, Ocwen sent a letter stating that it could not identify a problem with the account and asking the Diedrichs to identify which month and report they disputed, explain the dispute, and send evidence. The Diedrichs sued, alleging violations of RESPA. The Seventh Circuit affirmed, agreeing that Ocwen’s responses were insufficient and violated RESPA, but that the allegations of damages were “conclusory and vague.” View "Diedrich v. Ocwen Loan Servicing, LLC" on Justia Law

The D’Oench, Duhme doctrine, which originated in the federal common law and is now codified at 12 U.S.C. 1823(e), prevents borrowers from relying on oral agreements they allegedly had with a failed bank to defend against collection efforts of a federal receiver like the FDIC. In this case, plaintiffs filed suit against Heritage for beach of contract and fraudulent inducement after Heritage foreclosed on plaintiffs' properties. While the suit was pending, Heritage was declared insolvent and the FDIC was appointed as receiver. That same day, the FDIC entered into a Purchase and Assumption Agreement with Trustmark, under which it transferred to Trustmark various Heritage assets and liabilities, including plaintiffs' notes and guaranties. The district court subsequently granted the FDIC's motion to dismiss. Trustmark then pleaded 1823(e) as a defense and filed counterclaims against plaintiffs for the amount still owing on the notes. The district court granted Trustmark's motion for summary judgment. The court rejected plaintiff's waiver arguments, concluding that nothing about Trustmark's agreement with the FDIC expressly or impliedly indicates a voluntary or intentional surrender by Trustmark of the section 1823(e) defense it inherited from the FDIC. The court also rejected plaintiffs' assertion that Trustmark waived this defense by raising it in a dilatory manner. Finally, even viewing an executive’s testimony about the purported side agreement in favor of plaintiffs, there is no evidence from which a jury might conclude that all of the conditions necessary to overcome section 1823(e) are present. Accordingly, the court affirmed the judgment. View "C&C Inv. Prop. v. Trustmark Nat'l Bank" on Justia Law

Appellant opened three business accounts at Respondent Wells Fargo Bank. Respondent later unilaterally closed the three accounts, stating that the reason for the closure was because Appellant had been involved in a criminal activity. Appellant filed a complaint alleging defamation, false light, and declaratory relief. Appellant then filed a motion to compel Respondent to produce documents regarding the closure of her accounts, as well as the risk assessment processes and analysis for closing these accounts. The discovery commissioner decided that Respondent was not required to provide the requested records under the Bank Secrecy Act. The district court affirmed the commissioner’s report and recommendations but ordered Respondent to provide a privilege log concerning the subject matter at issue. After Respondent submitted a privilege log, the discovery commissioner recommended that the documents be deemed confidential. The district court affirmed and adopted the report and recommendations. Appellant’s cause of action for declaratory relief was ultimately dismissed by the district court. The Supreme Court affirmed, holding that the discovery commissioner and the district court did not err in concluding that the documents at issue were protected by the Suspicious Activity Report privilege under the Bank Secrecy Act. View "Johnson v. Wells Fargo Bank Nat'l Ass'n" on Justia Law