Justia Banking Opinion Summaries

Plaintiffs filed suit against Green Tree to prevent it from foreclosing on plaintiffs' home. Plaintiffs alleged that Green Tree lacked authority to foreclose. The district court granted Green Tree's motion to dismiss based on plaintiffs' lack of standing to challenge the assignment between creditors and concluded that plaintiffs' notice claim failed to state a plausible claim for relief under Ashcroft v. Iqbal. The court concluded that plaintiffs' invalid assignment claim is nearly identical to the claim in Quale v. Aurora Loan Services, LLC, where the court determined the homeowners did not have standing to raise such a claim because they “were not injured by the assignment” and any harm to the homeowners was not fairly traceable to the allegedly invalid assignment. The court also rejected plaintiffs' contention that the district court erred in dismissing their amended complaint where plaintiffs failed to state a facially plausible claim for relief. Accordingly, the court affirmed the judgment. View "Brown v. Green Tree Servicing LLC" on Justia Law

The Blanchards agreed to sell Marathon County property to the Hoffmans, who paid $30,000 up front. The land contract balance was due in 2015, with an option to close early by paying off the Blanchards’ new $142,000 mortgage, obtained as part of the agreement. The parties signed a separate “rental agreement,” under which the Hoffmans paid $500 per month. The land contract was not recorded. The lender obtained an Assignment of Leases and Rents as collateral, but did not obtain an Assignment of Land Contract. The bank recorded its mortgage and the Assignment. In 2014, the Blanchards filed a bankruptcy petition. The trustee filed an adversary proceeding against the lender under 11 U.S.C. 544(a)(3), which grants him the position of a bona fide purchaser of property as of the date of the bankruptcy, to step ahead of the mortgage and use the Blanchards’ interest in the land contract for the benefit of unsecured creditors. The trustee argued that a mortgage can attach a lien only to real property and that the Blanchards' interest under the land contract was personal property. The district court affirmed summary judgment in favor of the bank. The Seventh Circuit affirmed. A mortgage can attach a lien to a vendor’s interest in a land contract under Wisconsin law; this lender perfected its lien by recording in county land records rather than under UCC Article 9. View "Liebzeit v. Intercity State Bank, FSB" on Justia Law

The Blanchards agreed to sell Marathon County property to the Hoffmans, who paid $30,000 up front. The land contract balance was due in 2015, with an option to close early by paying off the Blanchards’ new $142,000 mortgage, obtained as part of the agreement. The parties signed a separate “rental agreement,” under which the Hoffmans paid $500 per month. The land contract was not recorded. The lender obtained an Assignment of Leases and Rents as collateral, but did not obtain an Assignment of Land Contract. The bank recorded its mortgage and the Assignment. In 2014, the Blanchards filed a bankruptcy petition. The trustee filed an adversary proceeding against the lender under 11 U.S.C. 544(a)(3), which grants him the position of a bona fide purchaser of property as of the date of the bankruptcy, to step ahead of the mortgage and use the Blanchards’ interest in the land contract for the benefit of unsecured creditors. The trustee argued that a mortgage can attach a lien only to real property and that the Blanchards' interest under the land contract was personal property. The district court affirmed summary judgment in favor of the bank. The Seventh Circuit affirmed. A mortgage can attach a lien to a vendor’s interest in a land contract under Wisconsin law; this lender perfected its lien by recording in county land records rather than under UCC Article 9. View "Liebzeit v. Intercity State Bank, FSB" on Justia Law

Plaintiff Bank of America brought an action against First American Title Insurance Company, Westminster Abstract Company, and others, alleging breach of contract and negligent misrepresentation in connection with mortgages that plaintiff had partially financed on four properties whose value had been fraudulently inflated and whose purchasers were straw buyers who had been paid for their participation. Shortly after closing, all four borrowers defaulted. After discovering the underlying fraud in the four loans during the foreclosure proceedings, plaintiff sued, among others, First American, which had issued closing protection letters that promised to reimburse plaintiff for actual losses incurred in connection with the closings if the losses arose from fraud or dishonesty, and Westminster, alleging that it had violated the terms of the closing instructions. The other defendants either defaulted or were dismissed. The Court of Appeals held that plaintiff’s claim against First American relating to the properties on which it had made full credit bids was barred by "New Freedom Mtg Corp v Globe Mtg Corp," (281 Mich App 63 (2008)). With respect to First American’s liability on the other two closings, the Court of Appeals concluded that the trial court properly granted summary disposition to First American and Westminster because plaintiff had failed to produce evidence that created a question of fact regarding whether Westminster knew of or participated in the underlying fraud in those closings. Finally, the Court of Appeals concluded that plaintiff had not established a link between Westminster’s alleged violations of the closing instructions and the claimed damages and, even if a link had been established, there were no damages because of plaintiff’s full credit bid at the foreclosure sale. The Supreme Court reversed, finding the Court of Appeals erred by concluding that plaintiff’s full credit bids barred its contract claims against the nonborrower third-party defendants. To the extent that New Freedom held that the full credit bid rule barred contract claims brought by a mortgagee against nonborrower third parties, it was overruled. Further, the closing instructions agreed to by plaintiff and Westminster constituted a contract upon which a breach of contract claim could be brought. Finally, the lower courts erred by relying on New Freedom to interpret the credit protection letters given that the terms of the letters in New Freedom differed materially from the ones at issue here. View "Bank of America, NA v. First American Title Ins. Co." on Justia Law

In this declaratory judgment action, at issue is which party, either Prospect or Mutual Bank, had priority under Texas law in certain collateral. Prospect obtained a money judgment for approximately $2.3 million against Michael Enmon in federal court in New York. To avoid paying the judgment, Enmon engaged in a series of fraudulent transfers of his assets. The district court granted summary judgment for Mutual Bank and Prospect appealed, arguing that, under Texas’s law of title disputes, it was entitled to a declaratory judgment that it had priority over Mutual in the contested collateral. The court concluded that Prospect’s unabstracted and unexecuted money judgment did not give it a lien interest in any of the specific contested collateral. Hence the doctrine does not apply. Furthermore, Prospect has not shown that the district court abused its discretion in denying Prospect’s request for Fed.R.Civ.P. 56(d) relief. Accordingly, the court affirmed the judgment. View "Prospect Capital Corp. v. Mutual of Omaha of Omaha" on Justia Law

In this declaratory judgment action, at issue is which party, either Prospect or Mutual Bank, had priority under Texas law in certain collateral. Prospect obtained a money judgment for approximately $2.3 million against Michael Enmon in federal court in New York. To avoid paying the judgment, Enmon engaged in a series of fraudulent transfers of his assets. The district court granted summary judgment for Mutual Bank and Prospect appealed, arguing that, under Texas’s law of title disputes, it was entitled to a declaratory judgment that it had priority over Mutual in the contested collateral. The court concluded that Prospect’s unabstracted and unexecuted money judgment did not give it a lien interest in any of the specific contested collateral. Hence the doctrine does not apply. Furthermore, Prospect has not shown that the district court abused its discretion in denying Prospect’s request for Fed.R.Civ.P. 56(d) relief. Accordingly, the court affirmed the judgment. View "Prospect Capital Corp. v. Mutual of Omaha of Omaha" on Justia Law

U.S. Bank was a senior lien holder on certain property, and First Nebraska Educators Credit Union’s interest was junior to U.S. Bank’s. After a foreclosure sale, First Nebraska filed suit, alleging that because it did not receive notice of the sale, it was not able to bid on the property, and its second lien interest was extinguished with the sale of the property. The district court granted U.S. Bank’s motion to dismiss for failure to state a claim, concluding that First Nebraska was not entitled to notice. At issue on appeal was whether U.S. Bank was required to mail a notice of sale to First Nebraska under Neb. Rev. Stat. 76-1008. The Supreme Court affirmed, holding that U.S. Bank was not required to serve notice of foreclosure sale upon First Nebraska. View "First Neb. Educators Credit Union v. U.S. Bancorp" on Justia Law

Jepson executed a note and mortgage on Illinois property, listing America’s Wholesale Lender as the lender and Mortgage Electronics Registration Systems (MERS) as its nominee. Jepson’s note was endorsed in blank by Countrywide, “doing business as America’s Wholesale Lender” and transferred to CWABS, a residential mortgage trust that pools loans and sells certificates backed by the mortgages to investors. CWABS was formed and governed by a Pooling and Service Agreement (PSA). BNYM, trustee for CWABS, now possesses Jepson’s note. MERS assigned Jepson’s mortgage to BNYM. Jepson defaulted. BNYM filed a foreclosure complaint. Jepson filed a Chapter 7 bankruptcy petition. BNYM sought to lift the automatic stay. Jepson filed an adversary complaint, seeking a declaration that BNYM had no interest in her mortgage because the note did not include a complete chain of intervening endorsements and was endorsed after the closing date in the PSA and that America’s is a fictitious entity, so that the note was void and not negotiable under Illinois law. The bankruptcy court held that, under governing New York law, Jepson lacked standing to challenge alleged violations of the PSA, dismissed the adversary complaint, and modified the automatic stay to allow BNYM to proceed with its Illinois foreclosure action. The district court affirmed. The Seventh Circuit agreed that Jepson lacks standing to raise challenges based on the PSA, but remanded for consideration of her other claims. View "Jepson v. Bank of NY Mellon" on Justia Law

Jepson executed a note and mortgage on Illinois property, listing America’s Wholesale Lender as the lender and Mortgage Electronics Registration Systems (MERS) as its nominee. Jepson’s note was endorsed in blank by Countrywide, “doing business as America’s Wholesale Lender” and transferred to CWABS, a residential mortgage trust that pools loans and sells certificates backed by the mortgages to investors. CWABS was formed and governed by a Pooling and Service Agreement (PSA). BNYM, trustee for CWABS, now possesses Jepson’s note. MERS assigned Jepson’s mortgage to BNYM. Jepson defaulted. BNYM filed a foreclosure complaint. Jepson filed a Chapter 7 bankruptcy petition. BNYM sought to lift the automatic stay. Jepson filed an adversary complaint, seeking a declaration that BNYM had no interest in her mortgage because the note did not include a complete chain of intervening endorsements and was endorsed after the closing date in the PSA and that America’s is a fictitious entity, so that the note was void and not negotiable under Illinois law. The bankruptcy court held that, under governing New York law, Jepson lacked standing to challenge alleged violations of the PSA, dismissed the adversary complaint, and modified the automatic stay to allow BNYM to proceed with its Illinois foreclosure action. The district court affirmed. The Seventh Circuit agreed that Jepson lacks standing to raise challenges based on the PSA, but remanded for consideration of her other claims. View "Jepson v. Bank of NY Mellon" on Justia Law

In 2002, the Cartees placed a deed of trust on their Nashville home to secure a loan from Citizens Bank. Although the recorded deed's acknowledgement declares that it was acknowledged in Alabama, it was executed and acknowledged in Tennessee. A month later, the Citizens Deed of Trust was re-recorded; the acknowledgment was revised, with a note declaring that “THIS DOCUMENT IS BEING RERECORDED TO ADD THE DERIVATION CLAUSE AND TO CORRECT THE NOTARY ACKNOWLEDGMENT.” The rerecorded deed was not reexecuted or acknowledged by the Cartees, nor did they have any knowledge of the rerecording. In 2004, the Cartees and Regions Bank entered into a credit agreement secured by a second deed of trust, also recorded. After 2005, federal tax liens, judgment liens, and a mechanic’s lien were recorded against the property. Years later, the Cartees defaulted on their mortgage loan. The Cartees defaulted on several forebearance agreements; Diana Cartee filed for bankruptcy. A foreclosure sale resulted in proceeds that satisfied the debt to Citizens, with a surplus of $281,632.74. In an interpleader action, the court awarded Regions the surplus proceeds and granted the successful foreclosure bidder summary judgment. The Sixth Circuit affirmed, holding that the Cartees could not attempt to invalidate the foreclosure by challenging the validity of the bidder’s deed, based on the “defect” in the Citizens Deed. View "Watson v. Cartee" on Justia Law