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Showing 15 posts in Mortgage Loans.

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A Rhode Island mortgage lender recently rescinded approval of a loan application because the prospective borrower reported income from his employment in Rhode Island's medical marijuana industry.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 ›

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 ›

Mortgages or milk - do you need to check your expiration date?

There are borrowers out there who believe that the Massachusetts Obsolete Mortgage Statute, M.G.L. c. 260 sec. 33, relieves them of their repayment obligations. This statute, amended back in 2006, provides that five years after a mortgage reaches its term (or 35 years after the time the mortgage is recorded where a maturity date is not specified) it will be discharged by operation of law absent the timely recording of an extension or affidavit. The 2006 amendment specifically applied to all existing mortgages. The law is supposed to provide clarity in conveyancing and protect borrowers if their mortgagee or servicer failed to issue a discharge of the mortgage after the mortgage reaches its term.

In Hayden v. HSBC Mortgage, the borrowers alleged that the statute should apply to their loan and the loan should be discharged by operation of law because five years had passed from the time the servicer had accelerated the loan. Mortgagees and servicers can rest easy, however, because the First Circuit rejected this theory outright. In a succinct and emphatic rejection, the court held that "[n]othing in the text of the statute supports the Haydens' assertion that the acceleration of the maturity date of a note affects the five-year limitations period for the related mortgage." Thus, a borrower's milk will undoubtedly expire well before his mortgage.

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 ›

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