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Showing 10 posts in Foreclosure.

Mortgage Holder Allowed to Proceed with Second Foreclosure Action after the First was dismissed with Prejudice

In Federal National Mortgage Association v. Thompson, the Wisconsin Supreme Court permitted a lender to pursue a second judicial foreclosure action after the first case was dismissed with prejudice. In the first foreclosure action, the lower court agreed with borrower Cory Thompson that his lender had failed to present evidence that a notice of intent to accelerate was mailed and that the servicer was in possession of the original note. After an unsuccessful appeal of the dismissal, the lender sent Thompson a new notice of intent to accelerate payment of the note and filed a second foreclosure action when no payments were received in response to the letter. Following trial of the second foreclosure action, the lower court granted judgment in favor of the lender. Thompson appealed, asserting that claim preclusion barred the second action. More ›

Despite Acceleration of Debt Through Prior Dismissed Foreclosure Action, Bankruptcy Petition Tolls Statute of Limitations on Subsequent Action

In Lubonty v. U.S. Bank National Association, a mortgagor sought to void a mortgage loan claiming that the six-year statute of limitations to foreclose had expired. The mortgagor had commenced multiple bankruptcy proceedings that trigged automatic stays and prevented foreclosure from proceeding for approximately four and a half years. New York law, CPLR § 204, extends the statute of limitations "[w]here the commencement of an action has been stayed by a court or by statutory prohibition," and the trial court held that the six-year statute of limitations was extended by the time period during which the foreclosure was stalled through successive bankruptcy petitions. More ›

HUD Regulation Requiring Face-to-Face Meeting Presents Compliance Challenge for Lenders Seeking Mortgage Foreclosure

In Dan-Harry v. PNC Bank, the Rhode Island federal court concluded that a mortgagor may bring a claim for damages and other remedies against a mortgagee on allegations of failure to conduct a pre-foreclosure face-to-face meeting required for breach of an FHA-insured mortgage. Dawari Dan-Harry obtained an FHA-insured mortgage loan to purchase property in Providence, Rhode Island, which included in Paragraph 9(d) the following provisions: "Regulations of HUD Secretary. In many circumstances regulations issued by the Secretary will limit Lender's rights, in the case of payment defaults, to require immediate payment in full, and foreclose if not paid. This Security Instrument does not authorize acceleration or foreclosure if not permitted by regulations of the Secretary." PNC Bank foreclosed on the mortgage and sold the property at auction to a third-party in January 2017. While continuing to occupy the property, Dan-Harry sued PNC for damages and to void the foreclosure sale on allegations that PNC failed to comply with HUD regulation 24 C.F.R. § 203.604(b), which requires a mortgagee to have a face-to-face meeting with the mortgagor or make a reasonable effort to arrange such a meeting before the mortgage becomes three months delinquent in payments. More ›

Recent Illinois Court Decision Illustrates Pitfalls of Multiple Filings of a Mortgage Foreclosure Action

While Illinois mortgagees have the option of recouping delinquent mortgage loan debt through different types of lawsuits, the pursuit of this option can violate Illinois' prohibition on refiling the same cause of action. A recent decision illustrates the pitfalls of a mortgagee's numerous lawsuits filed on the same default and debt in reliance upon Illinois' savings statute. More ›

Business Records Exception Used to Attack Foreclosure Action in Maine Supreme Court

The Maine Supreme Court, using a recent interpretation of the business records exception to the hearsay rule under Maine law, has raised questions regarding mortgage loan servicers' ability to foreclose on defaulted borrowers. An essential element of proof in any Maine judicial foreclosure action includes evidence of default, and in Key Bank Nat'l Ass'n v. Estate of Quint, the Court affirmed exclusion of a prior servicer's screenshots submitted to demonstrate the amount a borrower owed, costs incurred and the outstanding principal balance in pursuit of a judicial foreclosure action. The current servicer's witness testified to establish default on review of the prior servicer's business records and under exception to hearsay, but the trial judge concluded that the witness had not established the hearsay exception with regard to records of the prior servicer. More ›

Consumer Financial Services: What to Expect in 2018

2017 was a highly volatile year for the consumer financial services industry, featuring significant court rulings, regulatory changes and other developments.

With a new year upon us, Consumer Crossroads blog wanted to ask some of our Hinshaw financial services attorneys about what we might expect in 2018. Here they are, specifically prognosticating trends in FCRA litigation, reverse mortgages, student loan regulatory and litigation, CFPB developments, cryptocurrencies, TCPA litigation, lost promissory notes, federal regulatory conduct and local government responses to the foreclosure crisis. More ›

Mortgage Foreclosure Alert: Attaching Promissory Note in Illinois Sufficient to Show Standing; but HUD Letters Require Proof of Dispatch

In a foreclosure action, the Illinois Appellate Court recently held that the foreclosing lender established its standing by attaching the blank-indorsed note to its complaint, but reversed judgment and remanded for the trial court to determine if a letter required by the Secretary of Housing and Urban Development ("HUD") regulations was actually dispatched. More ›

No Surrender: Massachusetts Appeals Court Preserves Foreclosure Challenges for Bankruptcy Petitioner

Like Bruce Springsteen, a Massachusetts bankruptcy debtor said "no surrender" when it came to his home. In EverBank v. Chacon, a panel of the Massachusetts Appeals Court issued a non-binding decision that a debtor's "surrender" of real property in a bankruptcy petition does not waive defenses to an eventual foreclosure. EverBank had foreclosed on Mr. Chacon's home mortgage, acquired the property at the sale, and then sought to evict him through summary process action filed in Massachusetts state court. Mr. Chacon claimed that that EverBank did not comply with a HUD regulation that requires a face to face meeting prior to foreclosure rendering the foreclosure void. More ›

A Missing Massachusetts Promissory Note's Outsized Potential Impact on Foreclosures

In Zullo v. HMC Assets, LLC, the Massachusetts Land Court has issued a judicial about-face in deciding that a mortgage holder lacks standing to foreclose if that holder never possessed the mortgagor's original promissory note – even if that holder can submit a lost note affidavit from a predecessor holder. In a written decision issued in August 2014, the Land Court determined, in the very same case, that the mortgage holder could foreclose without possession of the original promissory note but with a lost note affidavit executed by a prior loan servicer. The 2014 Zullo decision directly contradicted two decisions arising out of the Massachusetts bankruptcy court, Desmond v. Raymond C. Green, Inc., 505 B.R. 365 (Bankr. D. Mass. 2014); Marks v. Braunstein, 439 B.R. 248 (Bankr. D. Mass. 2010), both of which concluded that under Massachusetts law, the foreclosing mortgage holder must have at one point possessed the original note, so that it can execute the lost note affidavit. More ›

Attention Mortgage Loan Servicers: Highest Court in Massachusetts Attempts to Clarify When Default Notices Must Strictly Comply with Paragraph 22 of the Standard Mortgage

The Massachusetts Supreme Judicial Court (SJC) provided further guidance - up to a point - on mortgagees’ strict compliance with the notice of default provisions within paragraph 22 of the standard mortgage (or the equivalent) and when that standard takes effect. Mortgage holders have litigated this issue for years in Massachusetts, and the SJC first addressed compliance with paragraph 22 in a July 17, 2015 decision Pinti v. Emigrant Mtge. Co., 472 Mass. 226 (2015). In Pinti, the SJC ruled that "strict compliance" with paragraph 22 was required to effectuate a valid foreclosure pursuant to the statutory power of sale. Understanding that this decision would invalidate hundreds and potentially thousands of foreclosures in Massachusetts, the SJC held that its newly minted strict compliance standard would apply prospectively from its July 17, 2015 decision. However, the SJC neglected to address whether the strict compliance standard would apply to cases already filed in the trial and appellate courts. This caused conflicting decisions by the Massachusetts courts and required the SJC to review its Pinti decision in short term after several appeals were filed. More ›

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