Mortgages

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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Foreclosure denied when the lender obtained assignment of the note and mortgage after filing the foreclosure action

In Federal Home Loan Mortgage Corp. v. Schwartzwald, 2012 Ohio 5017, 2012 Ohio LEXIS 2628 (Ohio 2012), the Supreme Court of Ohio joined other courts that have refused to allow banks to foreclose if they cannot prove by written evidence at the time of foreclosure that they have a legal right to foreclose. In this case, Federal Home Loan commenced a foreclosure action before it obtained an assignment of the promissory note and mortgage securing the loan, although it attempted to "cure" that...

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Washington Supreme Court holds MERS cannot initiate private deed of trust foreclosures

In Washington state, lenders typically use the deed of trust form for mortgages where the lender is the "beneficiary" of the trust and the "trustee" has the power to act to protect the beneficiary's interest by foreclosing on the property if the borrower defaults on the note (the underlying loan). MERS is typically listed as the beneficiary of the deed of trust rather than the lender that actually issued the loan  (and signed the note) in order to avoid having to record future assignments of the mortgage; the deed of trust is recorded listing MERS as the beneficiary rather than the...

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New Jersey Supreme Court allows foreclosure despite faulty procedures

In US Bank Nat'l Ass'n v. Guillaume, 38 A.3d 570 (N.J. 2012), the Supreme Court of New Jersey applied the equitable doctrine of substantial compliance to allow a bank to foreclose despite its failure to include the name and address of the actual lender on the notice of intent to foreclose as required by state law. The notice actually only included the name of the mortgage service, not the mortgage lender. Dismissal without prejudice is not the exclusive remedy for the service of a...

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