Mortgages

Time-barred claim in bankruptcy held not to violate Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act, 15 U.S.C. §§1692e, 1692f, probibits debt collectors from using "any false, deceptive, or misleading representation or means in connection with the collection of any debt. §1692e, as well as prohibiting any "unfair or unconscionable menas to collect or attempt to collect any debt," §1692f. In Midland Funding, LLC v. Johnson, 197 L.Ed.2d 790 (2017), the... Read more about Time-barred claim in bankruptcy held not to violate Fair Debt Collection Practices Act

Supreme Court rules that a city has a claim against a bank for the consequences of discriminatory subprime mortgages

In Bank of America Corp. v. City of Miami, 137 S.Ct. 1296, 197 L. Ed. 2d 678 (2017), the Supreme Court held that the City of Miami was an "aggrieved person" within the meaning of the Fair Housing Act, 42 U.S.C. §3602(i), and that it could sue the Bank of America (and other banks) for lost tax revenue and other municipal expenses resulting from alleged discriminatory grants of subprime mortgages to Miami residents that... Read more about Supreme Court rules that a city has a claim against a bank for the consequences of discriminatory subprime mortgages

Mortgage of joint tenancy interest does not encumber interests of joint tenants who do not join the deal

In Bac Home Loans Servicing, L.P. v. Savankham, 2016 Mass. LCR LEXIS 86 (Mass. Land Ct. 2016), a mother gave a bank a mortgage on her joint tenancy interest in property she shared with her two children. The children did not know about or participate in the transaction. Apparently, the bank thought it was getting a mortgage on the whole property rather than just the joint tenancy interest of one joint tenant and...

Read more about Mortgage of joint tenancy interest does not encumber interests of joint tenants who do not join the deal

Washington state law bans mortgage lender from changing locks and barring the borrower from her home after default but before foreclosure

Many mortgage agreements allow the lender to change the locks on the door and take over the property when a borrower-mortgagor defaults or abandons the property; this is intended to prevent the property from becoming dilapidated or taken over by squatters. However, some banks have locked owners out of their homes after they default even if they are still living there and there is no evidence of abandonment or harm to the premises.

The Washington Supreme Court outlawed this practice in  ...

Read more about Washington state law bans mortgage lender from changing locks and barring the borrower from her home after default but before foreclosure

Banks that foreclose without legal authority to do so commit the tort of wrongful foreclosure

The California Supreme Court held in Yvanova v.  New Century Mortgage Corp.,, 365 P.3d 845 (Cal. 2016), that a borrower has standing to prove that a nonjudicial foreclosure was wrongful because an assignment by which the foreclosing entity purportedly took a beneficial interest was void, thereby depriving the foreclosing party of any authority to foreclose through a trustee's sale. 

In a follow up case,...

Read more about Banks that foreclose without legal authority to do so commit the tort of wrongful foreclosure

Mortgagor cannot challenge foreclosure because of lack of evidence of valid mortgage assignments

The Nebraska Supreme Court has joined other courts that have held that a bank that holds the mortgage note may foreclose on the property even if there is no evidence of a valid chain of mortgage assignments and some doubt about whether the foreclosing party has the right to foreclose. Marcuzzo v. Bank of the West, 862 N.W.2d 281 (Neb. 2015). The theory is that the holder of...

Read more about Mortgagor cannot challenge foreclosure because of lack of evidence of valid mortgage assignments

No statute of limitations bars a claim to set aside a forged deed and subsequent mortgage

The New York Court of Appeals had reaffirmed the traditional rule that forged deeds do not convey title. It has clarified that no statute of limitations bars a challenge to a forged deed even if the purported owner has subsequently transferred interests in the land to a subsequent mortgagee who had no notice of the forgery. Faison v. Lewis, 32 N.E.3d 400 (N.Y. 2015). The Court ruled that the third party purchaser is not a "bona fide...

Read more about No statute of limitations bars a claim to set aside a forged deed and subsequent mortgage

Third Circuit supports MERS, holds that Pa. law does not require mortgage transfers to be recorded to be valid

Pennsylvania statutes have language that might have been interpreted to require transfers of interests in land (through deeds or mortgages) to be recorded to be valid. If true, that would have undermined the MERS system of mortgage registration. But the Third Circuit gave MERS a win and interpreted Pennsylvania law to recognize mortgage transfers at the moment they are signed; recording is not required for the transfer of the property interest to be valid but is simply for the convenience of the parties and subsequent conveyees. The case,...

Read more about Third Circuit supports MERS, holds that Pa. law does not require mortgage transfers to be recorded to be valid

Foreclosure complaint can subject law firm & bank to a claim for violating the Fair Debt Collection Practices Act (FDCPA)

The Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., regulates the processes by which debts are collected. The Third Circuit has agreed with other courts in holding that the filing of a foreclosure complaint can subject both the plaintiff bank and the lawyers filing the complaint to liability under the FDCPA. In the case of Kaymark v. Bank of America, N.A., 783 F.3d 168 (3d Cir. 2015), the allegation was that the complaint...

Read more about Foreclosure complaint can subject law firm & bank to a claim for violating the Fair Debt Collection Practices Act (FDCPA)