Mortgages

Postforeclosure judicial process satisfies due process clause

The Sixth Circuit has ruled that nonjudicial foreclosure satisfies constitutional due process requirements because the homeowner/borrower was given notice of the foreclosure and notice of who to cure the default or seek a loan modification and how to redeem the property (get it back) after the foreclosure sale during a six-month redemption period. Garcia v. Fed. Nat'l Mortg. Ass'n,  782 F.3d 736 (6th Cir. 2015). These statutory procedures...

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Mortgage can be equitably reformed because of mutual mistake

In a classic application of a traditional doctrine of contract law, the Massachusetts Land Court allowed a mortgage document to be reformed because of mutual mistake. Citibank, N.A. v. Heywood, 2014 WL 2158409 (Mass. Land Ct. 2014). While courts are very reluctant to amend written property documents or contracts because of unilateral mistake, it is standard practice to ignore the written terms of the agreement, despite the statute of frauds, when the evidence shows that it does not reflect the...

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Robo-signing mortgage servicer may have violated state false document statute

The Ninth Circuit held that a mortgage servicer that allegedly engaged in robo-signing may well have violated an Arizona statute, Ariz. Rev. Stat. § 33-420, that criminalizes filing false property title documents with the state recording offices. In re Mortg. Electronic Registrations Systems, Inc (Robinson v. Am. Home Mortg. Serv. Inc.), 2014 WL 2611314, 2 014 U.S. App. LEXIS 10934 (9th Cir. 2014). There was  evidence that trustee's sale documents were notarized in blank and...

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First Circuit supports MERS

The First Circuit reaffirmed its view of the validity of the MERS system under Massachusetts law. Mills v. U.S. Bank, (1st Cir. 2014) (reaffirming Culhane v. Aurora Loan Services of Nebraska, 708 F.3d 282 (1st Cir.2013)). The court explained that there was no conflict between MERS's role as the "mortgagee" and MERS's role as the nominee (agent) for the mortgagee (the actual Lender to whom promises were made under the note). Thus the note could be transferred from bank to bank while MERS held "legal title" to the...

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Owners who lost title to their homes through nonjudicial foreclosure are entitled to raise defenses to eviction

The Supreme Judicial Court of the Commonwealth of Massachusetts has ruled that owners may make affirmative defenses to eviction claims by banks that acquired title to their property through a private or nonjudicial foreclosure. Bank of America v. Rosa, 466 Mass. 613 (2013). Those defenses may challenge the way in which the bank acquired title to the property through the foreclosure process and and power of the bank to foreclose in the first place. They may also include any equitable defenses...

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No mandatory duty to record titles or mortgages so no evasion of law by MERS

Several lawsuits have been in progress arguing that MERS violated state recording statutes by not recording mortgage assignments and thus cheating recording offices out of fees they otherwise would have earned. Interpreting Illinois law, the Seventh Circuit rejected that claim as have other courts that addressed the issue. Union County v. MERSCORP, Inc., 2013 WL 6017394 (7th Cir. 2013) (applying Ill. law). The court explained that Illinois law...

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Foreclosure purchaser cannot use self-help to evict tenant at will

New Hampshire law allows tenancies to be created at-will; that means they can be terminated by either party at any time. When the landlord lost the property through foreclosure, the tenancy ended automatically and no new landlord/tenant relationship was established merely because the tenant kept living on the property. Nor did a state statute that specifically prohibited self-help eviction, N.H. Ev. Stat. §540-A, apply in such a case. Nonetheless, the New Hampshire Supreme Court ruled that summary process was available to evict recover possession of the property and that this available...

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Idaho Supreme Court allows MERS to initiate foreclosure proceedings

The Idaho Supreme Court endorsed the power of MERS (Mortgage Electronic Registration Systems) to initiate nonjudicial foreclosure proceedings. Edwards v. Mortg. Elec. Registration Sys. Inc., 300 P.3d 43 (Idaho 2013).The court held that MERS was an agent (nominee) for the actual lender and holder of the beneficial interest in the deed of trust and could act on behalf of its principal. The original deed of trust named Alliance Title as trustee, Lehman Brothers as the lender, and MERS as the beneficiary as nominee for...

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California Homeowner Bill of Rights regulate foreclosures

California passed a statute on Jan. 1, 2013 called the California Homeowner Bill of Rights (Assembly Bill 278, ch. 86, adopted July 11, 2012) (effective Jan. 1, 2013). Among other things, it prohibits banks from proceeding with foreclosures if the homeowners is seeking a loan modification and it requires the bank to act on qualified applications for loan modifications. Cal. Civ. §2923.5.It also subjects banks to a penalty for recording unverified documents. Cal. Civ. §2924.17. It also prevents...

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HUD rule prohibits LGBT discrimination in mortgage lending and other programs it administers

In 2012, HUD adopt an Equal Access Rule that prohibits lenders from discriminating on the basis of actual or perceived sexual orientation, gender identity or marital status in granting mortgages insured by the Federal Housing Administration (FHA). 24 C.F.R.Parts 5, 200, 203, 236, 400, 570, 574, 882, 8991, 982 (77 Fed. Regis. 5662 (Feb. 3, 2012). The rule applies to all housing programs administered by the department. In January 2013, HUD entered a...

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