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Showing 21 posts in Mortgage Loans.

Congress is Nearing a $2 Trillion Stimulus Deal, Here's What it Means for Loan Servicers

The COVID-19 outbreak has resulted in unprecedented job loss for millions of Americans, creating economic uncertainty and challenges for loan servicers in 2020. Until the outbreak is controlled, missed payments on mortgages and student loans are likely to increase. Already, the U.S. Department of Housing and Urban Development (HUD) and the Federal Housing Finance Agency (FHFA) have issued 60 day moratoriums on foreclosures and evictions, which some states—and most banks and mortgage loan servicers—have adopted. Meanwhile, the Department of Education has announced that all borrowers with federal loans will have their interest rates automatically set at 0% for at least 60 days. Late Wednesday night, the Senate passed H.R. 748, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) after senate leadership reached an agreement with the White House earlier in the week. The legislation now moves to the House of Representatives for what many hope is unanimous consent. While we are still waiting on the House of Representative's approval, we've explored measures within the bill that will immediately impact student and mortgage loan servicers and outlined them below. More ›

NYDFS Issues Order and Instructions to Regulated Entities in Response to COVID-19

In response to challenges facing the financial services industry as a result of coronavirus (COVID-19), New York's Department of Financial Services (DFS) has issued a COVID-19 compliance order, along with a series of industry guidance letters related to the organizational preparedness of regulated institutions to manage risks associated with the outbreak.

Below is a summary of these recent actions and requests for information. Institutions are encouraged to visit the DFS website for additional updates and information. Hinshaw is well-positioned to assist impacted institutions in their review of the DFS instructions and the preparation of responses. More ›

Legal Guidance Watch: Second Circuit Nostra Sponte Certifies a Series of Mortgage Lender Compliance Questions to New York Court of Appeals

The Second Circuit recently certified two questions to the New York Court of Appeals regarding the requisite proof needed for borrowers to dispute the lender's compliance with New York Real Property Procedures and Acts ("RPAPL") § 1304 and the required filings under RPAPL § 1306 for a multi-borrower mortgage loan. The New York Court of Appeals has not yet ruled on these statutes and the requisite proof needed to comply with them. A decision on these issues could greatly impact the mortgage industry, given the impact of these statutes on mortgage foreclosure proceedings. More ›

First Circuit Reverses Course in Closely-Watched Pre-Foreclosure Notice Decision, Defers to Massachusetts Supreme Judicial Court

Earlier this year, Hinshaw reported on a decision by the First Circuit Court of Appeals which invalidated a Massachusetts foreclosure based on the Court's determination that the mortgage loan servicer's notice of default included additional language which did not strictly comply with Paragraph 22 of the mortgage. In the wake of that decision, the servicer filed a petition for rehearing on several grounds, but primarily because the Code of Massachusetts Regulations required use of what the Court had characterized as additional language. The banking community also filed several amicus briefs in support of Chase's petition. More ›

Florida Supreme Court Awards Appellate Attorney's Fees to Borrower After Mortgagee Voluntarily Drops Appeal

In a recent 4-3 decision, the Florida Supreme Court concluded that a borrower was entitled to her appellate attorneys' fees because she was the prevailing party in a judicial foreclosure action in which her mortgagee had voluntarily dropped the appeal. Marie Anne Glass' mortgage loan servicer filed a complaint for judicial foreclosure in December 2013. Glass moved to dismiss the case on grounds that did not challenge the default, but instead argued that her mortgagee failed to allege or demonstrate that it was the proper holder of the note. Ultimately, the trial court granted Glass' motion and dismissed the case with prejudice. More ›

Another Court Refuses Lost Note Status to a Successor Lender

Last year, we reported on a Massachusetts Land Court decision, which interpreted Uniform Commercial Code section 3-309 to conclude that a mortgagee cannot foreclose in reliance upon a lost note affidavit, because the 1990 version of UCC 3-309 requires the party seeking to enforce the note demonstrate possession prior to its loss. 32 states remain under the 1990 version, and recently the Rhode Island Supreme Court joined decisions that prohibit enforcement of a lost note under this outdated version of the UCC. In SMS Fin. v. Corsetti, SMS Financial sued to enforce default on a note that was lost by a prior transferee. Sovereign Bank had loaned the defendants $1 million in exchange for a promissory note and a mortgage on property located at 385 South Main Street in Providence, Rhode Island. Following default and foreclosure, the defendants issued to Sovereign a new promissory note to repay the $200,000 deficiency on the original loan. Sovereign subsequently assigned its interest in the loan to SMS Financial; but, Sovereign had lost the original note so it delivered to SMS a lost note affidavit and an allonge. SMS filed suit against the defendants to collect on breach of the note, but the Superior Court entered summary judgment in favor of the defendants because SMS could not enforce the lost note. More ›

New York is Split on Whether Notice of Default Letters Trigger the Statute of Limitations

In Milone v. US Bank, N.A., a New York intermediate appellate court held that a letter to a borrower stating that the failure to cure a mortgage loan default "will result in acceleration" does not start the clock on the statute of limitations to foreclose and recover the entire debt. This ruling differs from that of another New York intermediate appellate court, which had ruled otherwise, setting up the possibility of the New York Court of Appeals weighing in on a key issue in New York foreclosure actions. More ›

Congress Waters Down Dodd-Frank for Small and Regional Banks, Updates Consumer Protections

After much anticipation, Senate bill 2155—which rolls back major aspects of the Dodd-Frank law—was approved by Congress and was signed into law by President Trump.

Among the most notable changes, the legislation waters down regulations for small and regional banks. The threshold for banks "too big to fail" will be raised from $50 billion in assets to $250 billion, so that fewer than ten major U.S. banks will now be subject to Dodd-Frank's strictest regulations, including the Federal Reserve's stress test.

While the bill is widely regarded as regulatory roll back, the legislation also updates certain consumer protections, mostly regarding credit reports and student loans. 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 ›

Federal Prohibition of Marijuana Restricts Lenders Ability to Issue Loans to Borrowers Employed in Marijuana Industry

A Rhode Island mortgage lender recently rescinded approval of a loan application because the prospective borrower reported income from his employment in Rhode Island's medical marijuana industry. The lender was aware of the borrower's source of income at the time it issued a pre-approval letter, but ultimately denied the loan because the Federal Housing Authority (FHA) will not purchase or invest in a loan where the borrower is employed by, or receives compensation related to, the marijuana industry. FHA's Single Family Housing Policy Handbook provides that a lender may only consider a borrower's income if it is legally derived. Since marijuana remains illegal under federal law, any income derived from the cannabis industry cannot be considered as effective income for purposes of underwriting a loan. The denial of the loan came days after the United States Attorney General rescinded the Cole Memorandum, an internal justice department policy enacted during the Obama administration, which directed federal prosecutors to limit enforcement of federal marijuana laws in states that legalized and regulated cannabis. More ›

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