Financial Services Blog

Showing 49 posts in Foreclosures.

ATTORNEYS ENGAGED IN RESIDENTIAL MORTGAGE FORECLOSURE SUBJECT TO FAIR DEBT COLLECTION PRACTICES ACT

On January 14, 2013, the Sixth Circuit Court of Appeals ruled that the Fair Debt Collection Practices Act (“FDCPA”) applies to foreclosures, even non-judicial foreclosures, of residential property.  The law firm of Reimer, Arnovitz, Chernek & Jeffrey Co., LPA and two of its attorneys (“RACJ”) were sued for foreclosing on a home for improperly alleging that JPMorgan had conveyed, assigned and transferred all of its rights in a promissory note to Chase Home Finance LLC (“Chase”), an arm of JPMorgan.  Also sued were JP Morgan and Chase. In fact, the Note had already been assigned to Fannie Mae, although the loan was serviced by JP Morgan and subsequently Chase.  The Sixth Circuit held the FDCPA claims could proceed against RACJ based on the improper assertions of ownership of the Note by Chase.  Mortgage foreclosure, including non-judicial foreclosures, was deemed to equal debt collection under the Act.  However, the servicer, Chase, was not liable because the FDCPA only applies to a debt collector, and at the time the loan was assigned to Chase, the Note was not in default.  The Sixth Circuit’s Opinion is also consistent with the Third and Fourth Circuit of the Court of Appeals.  However, a number of district courts have disagreed with this result, instead analyzing foreclosures as the enforcement of security interests rather than the collection of a debt.  The Sixth Circuit concluded that other than repossession agencies and their agents, it could think of no others whose only role in the collection process is the enforcement of the security interest. Read More ›

Will the Real Owner of This Mortgage Loan Please “Stand”: The Necessary Standing for Ohio Foreclosure Actions After Schwartzwald

On October 31, 2012, the Supreme Court of Ohio was terrifying the banking industry by its decision in Federal Home Loan Mortgage Corp. v. Schwartzwald, 2012-Ohio-5017 (Oct. 31, 2012) at the same time as ghosts and goblins were scaring children.  In Schwartzwald, the Court answered the question of whether a lender could correct its lack of standing when commencing a foreclosure action by obtaining an assignment of a note and mortgage prior to the final judgment of foreclosure and sale.  Read More ›

Equitable Subrogation Unavailable when Actual or Construction Notice of Intervening Judgment Lien Exists

The Kentucky Supreme Court, on March 24, 2012, in the case of Mortgage Electronic Registration Systems Inc.[MERS] v. Roberts, 366 S.W.3d 405 (Ky. 2012), conclusively held that the doctrine of equitable subrogation was unavailable to protect a subsequent lender and mortgage holder when its loan proceeds were used to pay off a prior lender’s mortgage and an intervening properly filed judgment lien created actual or constructive notice.  The Court expressly held that the so-called “Wells Fargo rule” under which equitable subrogation is not available if the lender has constructive knowledge of an existing tax lien also applied to an intervening judgment lien, overruling the prior decision in Louisville Joint Stock Land Bank v. Bank of Pembroke, 9 S.W.2d 113 (Ky. 1928). Read More ›

Consumer Financial Protection Bureau Weighs Into Rescission Argument Under The Truth In Lending Act

On March 26, 2012, the Consumer Financial Protection Bureau filed an Amicus Brief in the United States Court of Appeals for the Tenth Circuit in which it took the side of the consumer in an interpretation of Section 125 of the Truth in Lending Act relating to the statutory right to rescind certain types of mortgage loans.  Read More ›

Indiana Supreme Court Reaffirms Limits To Jury Trials In Foreclosure Actions

The Indiana Supreme Court recently clarified the standard for when defendants in mortgage foreclosure actions are entitled to have a jury, rather than a judge, consider their defenses and counterclaims. Lucas v. U.S. Bank, N.A., 953 N.E.2d 457 (Ind. 2011). Plaintiff bank filed an action against two borrowers to enforce the terms of a promissory note and to foreclose the mortgage that secured the note. The borrowers asserted various statutory and common law defenses and counterclaims and filed a third-party complaint against the loan servicer, asserting similar common law and statutory claims. The borrowers also filed a demand for a jury trial “on all issues deemed so triable.” Read More ›

Do Lenders Have A Right To Credit Bid On Their Collateral?

Last month, the U.S. Supreme Court agreed to hear another bankruptcy case and this one could have a profound effect on a lender’s bidding rights when its collateral is up for sale.  RadLAX Gateway Hotel, LLC v. Amalgamated Bank, No. 11-166, cert. granted Dec. 12, 2011.  In the lower courts, the debtor sought approval of a bankruptcy plan which would have sold the lender’s collateral at auction without allowing the bank to credit bid.  The Seventh Circuit Court of Appeals rejected that approach, saying that secured creditors had a right to acquire the property by bidding with their liens. Read More ›

American Law Institute Attempts To Clarify Law Concerning Transfer And Enforcement Of Mortgage Notes

The current “Mortgage Crisis” has prompted many borrowers to challenge the right of a lender or mortgage servicer to bring a foreclosure action, asserting that errors in the process of selling or assigning the note and/or mortgage make it difficult or impossible to enforce those documents.  Those contests have often been couched in terms of lack of standing, inability to prove ownership of mortgage documents or invalid/undocumented assignment of those documents.  Both counsel and courts have sometimes evidenced uncertainty concerning the applicable law and its impact on these issues.  On November 14, 2011, the American Law Institute published a report entitled “Application of the Uniform Commercial Code to Selected Issues Related to Mortgage Notes” which attempts to clarify some of the frequently encountered questions in this area.  It can be found at www.uniformlaws.org/shared/committees_materials/PEBUCC/PEB_Report_111411.pdf. Read More ›

Improperly Executed But Properly Recorded Mortgage Isn't A Lien

            The mortgage was not properly executed because the borrower / mortgagor’s signature was not notarized as required by Ohio Revised Code Section 5301.01.  The mortgage was appropriately recorded despite the deficiency.  With record notice of the current mortgage (and possibly actual notice too), a second lender advanced money to the same borrower and recorded a properly executed mortgage.  The latter mortgage was recorded about two years after the first, improperly executed, mortgage was recorded.  Read More ›

Ohio Court Refuses To Permit An Auctioneer, Rather Than A Sheriff, To Sell Property Following Foreclosure

            In The Huntington National Bank v. Conservatory Associates Limited Liability Copmany, et al. (2011), Medina Co. No. 10CA0096-M, 2011-Ohio-3249 (Jun. 30, 2011) the Court of Appeals affirmed the granting of summary judgment on a foreclosure complaint to Plaintiff Huntington National Bank (“the Bank”), but reversed the trial court’s order appointing an auctioneer to sell the property rather than a sheriff. Read More ›

Ohio Appellate Court Upholds Authority Of Receiver To Sell Property Without Regard To Statutory Notice Requirements

In recent years, some question has arisen under Ohio law regarding the authority of a receiver to sell property, thus avoiding a traditional foreclosure sale.  While there is some authority for the position that a receiver may not sell property that is subject to a foreclosure proceeding, a growing number of courts have permitted a receiver to sell property at a private or public sale free and clear of all liens and encumbrances.  Having permitted receiver sales, these courts have also been called to consider the extent to which Ohio’s statutory requirements for judicial sales in aid of execution apply to receiver sales. Read More ›

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Attorney Spotlight

Christopher C. Tieke is an associate in Frost Brown Todd's Louisville office, focusing his practice on business litigation. He graduated from the University of Cincinnati College of Law, with magna cum laude honors; served as an Associate Member of the University of Cincinnati Law Review; and participated in the Entrepreneurship and Community Development Clinic.

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