Mortgages

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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Lawyers held to be "debt collectors" that can be held liable for false statements in connection with a foreclosure

In Glazer v. Chase Home Finance, 704 F.3d 453 (6th Cir. 2013), the Six Circuit found lawyers who initiated a foreclosure may be "debt collectors" subject to the Federal Debt Collection Practices Act (FDCPA), 15 U.S.C. §§1692 to 1692p, if they regularly perform this function, and thus may be liable for making "false, deceptive or misleading representations" in connection with the foreclosure.

Court uses equitable considerations to give legal force to a forged deed to protect one of two innocent victims who had less ability to prevent the harm

In Pasqualino v. Washington Mutual Bank, 982 N.E.2d 72 (Mass. App. Ct. 2013), the court was forced to decide which of two innocent parties should bear the financial burden of a forged deed. Although the normal rule is that a forged deed is a nullity and conveys nothing, in this case, the court protected the party that relied on the forged deed because the original owner contributed to the problem by making the forger the trustee of the property. The property was originally conveyed by Salvatore Pasqualino to a trust controlled by his son Ronald. The father Salvatore knew his son used...

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Massachusetts court enjoins company from preparing and selling deeds because it constitutes the unauthorized practice of law

The superior court in the Commonwealth of Massachusetts granted a preliminary injunction against a company called ANADeeds, Inc. to stop it from preparing and selling deeds and other legal instruments for the conveyance of property in Massachusetts. Real Estate Bar Ass'n v. ANAdeeds, 2012 Mass. Super. LEXIS 380 (Mass. Super. Ct. 2012). Judge Lauriat explained that "[i]n Massachusetts, drafting a deed constitutes the practice of law," citing ...

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First Circuit allows MERS to assign mortgages to the mortgage holder

State courts have disagreed about whether MERS (Mortgage Electronic Registration Systems) has standing to foreclose on property or to assign whatever interest it has in the mortgage to the bank that holds the mortgage currently so that that bank can bring foreclosure proceedings. Some courts have held that MERS has no property interest in the mortgage but is a mere agent for the mortgage owner so it cannot bring foreclosure proceedings itself or assign the mortgage to anyone else.   Bain v. Metropolitan Mortgage Group, Inc., 285 P.3d 34, 36–37 (Wash. 2012) (because MERS does not...

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