Justia Banking Opinion Summaries

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

U.S. Bank participates in an FHA-backed mortgage insurance program that encourages lending to high-risk borrowers. U.S. Bank had to certify that it would meet certain requirements, and each time it requested an insurance payment, had to certify that it had followed 24 C.F.R. 203.500 requirements, including engaging in “loss mitigation” measures, such as attempting to arrange a face-to-face meeting with the defaulting borrower, before foreclosing. According to ABLE, an Ohio non-profit organization, U.S. Bank did not satisfy the loss mitigation requirement, wrongfully foreclosed on 22,000 homes, and wrongfully collected $2.3 billion in federal insurance benefits. ABLE alleged violation of the False Claims Act, 31 U.S.C. 3729. The Department of Justice declined to intervene. The district court found that ABLE premised its case on information that had already been publicly disclosed, precluding it from bringing suit as a qui tam plaintiff. The Sixth Circuit agreed, noting a 2011 consent order between U.S. Bank and the government, requiring U.S. Bank to implement reforms, including measures “to ensure [that] reasonable and good faith efforts, consistent with applicable Legal Requirements, are engaged in Loss Mitigation and foreclosure prevention for delinquent loans,” and a 2011 foreclosure practices review by three federal agencies, which noted that U.S. Bank had failed to take various mitigation measures. View "ABLE v. U.S. Bank, N.A." on Justia Law

Goldenstein, obtained a $1,000 online loan from a company owned by Chippewa Indians, incorporated under Chippewa tribal law, and authorized to issue loans secured by vehicles at interest rates greater than permitted under Pennsylvania law. Goldenstein pledged his car and was charged 250 percent interest. The company, after deducting a $50 transfer fee and wiring $950 to Goldenstein, withdrew installments of $207.90 from Goldenstein’s bank account in June and July. Goldenstein removed funds from the account because he did not recognize the activity on his bank statements. When the company attempted to collect the August installment, it was rejected for insufficient funds. Repossessors took Goldenstein’s car. Goldenstein was told that his payment would not be accepted, nor his car returned unless he signed releases. Goldenstein paid $2,393 ($2,143 for the loan and $250 in repossession fees), signed the releases, then filed suit, claiming violations of the Fair Debt Collection Practices Act, 15 U.S.C. 1692–1692p; Pennsylvania’s Fair Credit Extension Uniformity Act and Uniform Commercial Code; and the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1962(c). The Third Circuit vacated summary judgment in favor of the defendants on the RICO and state law claims, but affirmed as to the FDCPA claim. Forfeiture of collateral can amount to “collection of unlawful debt” under RICO, but defendants had a right to possession and did not violate the FDCPA by repossessing the car. View "Goldenstein v. Repossessors Inc." on Justia Law

Plaintiff filed suit against defendants, alleging common-law fraud and violations of the Truth in Lending Act (TILA), 15 U.S.C. 1601 et seq. Plaintiff alleged that she never agreed to the mortgage loan at issue. The court concluded that the district court acted within its discretion in admitting an attorney's testimony under FRE 406 regarding the fact that he had met with plaintiff and had not asked her to sign blank sheets of paper; the district court did not abuse its discretion in admitting the loan documents at issue under FRE 901(a) for authenticated records and the court rejected plaintiff's argument that admission of the photocopies violated the best evidence rule where the original documents had been lost; plaintiff's FRCP 50 argument fails where the evidence was more than adequate to warrant the jury in finding for defendants' on the case's central issue; and the district court did not abuse its discretion in denying plaintiff's FRCP 59 motion for a new trial where nothing in the record warranted upsetting the verdict. Accordingly, the court found no error and affirmed the judgment. View "Crawford v. Franklin Credit Mgmt. Corp." on Justia Law

In 2007, Cindy and David Ames executed a security deed to their residential property in favor of Washington Mutual Bank, F.A. (WaMu). WaMu’s receiver, the Federal Deposit Insurance Corporation (FDIC), later assigned the deed to JP Morgan Chase Bank, N.A (Chase). When Chase initiated a non-judicial foreclosure sale on the property, the Ameses filed lawsuits in state court and then in federal court, alleging among other things that the assignment of the security deed to Chase was invalid. The Georgia Supreme Court granted certiorari to decide whether the Georgia Court of Appeals erred in concluding in the state lawsuit, the Ameses lacked standing to bring such a challenge to the assignment, a conclusion based on that court’s previous decisions in "Montgomery v. Bank of America," (740 SE2d 434 (2013)), and "Jurden v. HSBC Mortgage Corp.," (765 SE2d 440 (2014)). The Supreme Court found no reversible error in the appellate court's decision. Alternatively, the assignment issue raised by the Ameses was precluded because it had already been resolved against them in their federal lawsuit by the United States Court of Appeals for the Eleventh Circuit. View "Ames v. JP Morgan Chase Bank, N.A." on Justia Law

In 2008, Mutual Bank (UCB’s predecessor) made loans to the investors to purchase three properties and agreed to loan the investors $700,000 for repairs and renovations. The $700,000 was placed in escrow, but the parties did not enter into a written escrow agreement. Once the investors exhausted other resources on repairs, they requested the $700,000, but never received the money. In 2009, the FDIC shut down Mutual Bank for gross negligence. UCB acquired Mutual’s loans and assets. The investors made repeated demands on UCB to release the $700,000 in escrow but did not receive the money. In 2010, UCB brought suit against the investors to foreclose on the properties and enforce related promissory notes and guarantees. The investors brought counterclaims, including a claim that UCB’s refusal to release the escrow funds constituted a breach of contract. The district court dismissed, citing the Financial Institutions Reform, Recovery, and Enforcement Act, 12 U.S.C. 1823(e)(1)(A), and the Illinois Credit Agreement Act. The Seventh Circuit affirmed. The escrow agreement that forms the basis for the counterclaim tends to diminish the interests of the FDIC and its assignee UCB. Since the agreement was not properly memorialized in writing, the agreement does not meet the requirements of section 1823(e). View "United Cent. Bank v. Davenport Estate LLC" on Justia Law

Debtor, a construction business, filed a voluntary Chapter 11 bankruptcy petition, which was converted to chapter 7. A The Bank holds a valid, first-priority security interest in all of the Debtor’s assets, including accounts receivable. The Trustee discovered that checks payable to the Debtor had been negotiated and deposited into the personal account of Hartford, the father of Debtor’s principal, totalling $36,389.89. Before initiating adversary litigation, the Trustee engaged in settlement talks with Hartford, who agreed to pay $36,389.89 to the estate and release the estate from all claims involving the transfers. While the Trustee was pursuing settlement., the Bank obtained an order modifying the automatic stay to allow it to exercise its state law remedies with respect to collateral, then filed suit to recover from Hartford the value of the checks. A state court entered judgment in favor of the Bank. The next day, the Trustee successfully moved for approval of the Hartford settlement. The Bank objected. The bankruptcy court rejected the Bank’s argument that the order granting relief from the automatic stay allowed it to pursue the fraudulent transfer action in state court. The district court affirmed. The Seventh Circuit dismissed for lack of jurisdiction, finding that the bankruptcy court entered no final judgment or appealable order. View "Schaumburg Bank & Trust Co. v. Alsterda" on Justia Law

Petitioner Deutsche Bank National Trust Company, acting as trustee for Morgan Stanley ABS Capital 1 Inc. Trust 2006-NC4 (Deutsche Bank), filed a complaint seeking foreclosure on Respondent Johnny Johnston's home (Homeowner), and attached to its complaint an unindorsed note, mortgage, and land recording, both naming a third party as the mortgagee. Deutsche Bank later provided documentation and testimony showing that :(1) a document assigning the mortgage to Deutsche Bank was dated prior to the filing of the complaint but recorded after the complaint was filed; (2) Deutsche Bank possessed a version of the note indorsed in blank at the time of trial; and (3) a servicing company began servicing the loan to Homeowner on behalf of Deutsche Bank prior to the filing of the complaint. After receiving this evidence, the district court found that Deutsche Bank had standing to foreclose on Homeowner’s property. The Court of Appeals disagreed, finding that “standing is a jurisdictional prerequisite for a cause of action,” and concluded that the evidence provided by Deutsche Bank did not establish its standing as of the time it filed its complaint. The Supreme Court held that standing was not a jurisdictional prerequisite in this case. Nonetheless the Court affirmed the Court of Appeals’ ultimate conclusion that the evidence provided by Deutsche Bank did not establish standing. View "Deutsche Bank Nat'l Trust Co. v. Johnston" on Justia Law

Facing more than $40,000 in unsecured debt that she owed to Discover Bank and other banks, Susan Ossello enrolled in a debt reduction program and signed a contract with Global Client Solutions. Ossello subsequently stopped making payments on her credit card debt, and Discover Bank brought a collection action against her. Ossello filed a third-party complaint against Global, alleging that Global used deceptive and fraudulent representations to solicit her participation in an illegal debt settlement plan. Global filed a motion to compel arbitration and to dismiss the third-party complaint for lack of jurisdiction. The district court concluded that the arbitration clause in Global’s contract was unconscionable and not unenforceable and therefore denied Global’s motion to dismiss and to compel arbitration. The Supreme Court affirmed, holding that the district court did not err in (1) reserving to itself the determination of arbitrability, and (2) declaring that the arbitration provision was unconscionable and therefore not enforceable against Ossello. View "Discover Bank v. Ossello" on Justia Law

Plaintiff filed suit against the assignee of his mortgage after his servicer failed to provide a payoff balance. The Truth in Lending Act (TILA), 15 U.S.C. 1641(e)(1)(A), creates a cause of action against an assignee for a violation that is “apparent on the face of the disclosure statement provided in connection with [a mortgage] transaction pursuant to this subchapter.” The court affirmed the dismissal of plaintiff's amended complaint because the failure to provide a payoff balance is not a violation apparent on the face of the disclosure statement. View "Evanto v. Federal National Mortgage Ass'n" on Justia Law