Florida's Fourth District Court of Appeal breathed life back into the lis pendens statute by reversing course in Ober v. Town of Lauderdale-By-the-Sea. On a motion for rehearing, the Court withdrew and replaced its August 24, 2016 opinion, which "eviscerated" the lis pendens statute by holding that liens placed on property between a final judgment of foreclosure and the judicial sale were not discharged by Florida Statute § 48.23. For an in-depth discussion of the Court's August 24, 2016 opinion, click here. Consistent with the real property and mortgage industry's understanding ...
On Tuesday the D.C. Circuit Court of Appeals issued what is already being touted as a landmark ruling in PHH Corp. v. Consumer Financial Protection Bureau, No. 15-1177, 2016 WL 5898801 (D.C. Cir. Oct. 11, 2016), holding in a 2-1 decision that the structure of the Consumer Financial Protection Bureau (the "CFPB"), and specifically its organization as a "single-Director independent agency" with no meaningful Presidential oversight, violates Article II of the United States Constitution, which in relevant part vests the authority to "take Care that the Laws be faithfully executed" in ...
Florida's 4th District Court of Appeal sent the real property and mortgage world into a frenzy this week after issuing its opinion in Ober v. Town of Lauderdale-By-The-Sea, dramatically weakening the protections of Florida's lis pendens statute. It held that a lien placed on a property after the foreclosure judgment which arises from an action occurring post-judgment, is not extinguished by Florida Statute §48.23. The term most commonly used in emails and articles drafted by attorneys to describe the impact of this decision on the lis pendens statute is "eviscerate". This type of ...
The Consumer Financial Protection Bureau (CFPB) released a special edition of its supervision report, honing in on mortgage servicers on June 22nd [1]. It blamed outdated technology and process breakdown for trends it has seen with violations of the CFPB's 2014 servicing rules. The primary areas of concern are communications and data related to loan modifications and servicing transfers.
Among the highlights of the report, CFPB examiners found that "information about loan modifications is late, incorrect, or deceptive, due to technological breakdowns or malfunctions ...
It's hornbook law that a later intentional breach of contract, alone, doesn't equal promissory fraud.
Holding it therefore cannot establish mail or wire fraud, the Second Circuit reversed the Government's $1.2 Billion FIRREA judgment against Countrywide, Bank of America and others, with instructions to dismiss the case. The case started as a qui tam action alleging that Countrywide's "high-speed swim lane" process delivered substandard mortgage loans to GSEs (Fannie, Freddie) during performance of master mortgage-loan sales agreements ("MLSAs") executed earlier. The ...
For years, counsel for borrowers have successfully argued that the bank failed to meet conditions precedent required under Section 559.715 of Florida's Consumer Collection Practices Act ("FCCPA"). Procedurally, this argument has been raised in the borrower's answer to the mortgage foreclosure complaint. Rather than simply alleging it as a well-pled affirmative defense, the borrower generally denies that the lender complied with all conditions precedent required to bring a mortgage foreclosure action. The borrowers' strategy is to then move for summary judgment denying ...
In the case of Sill v. JPMorgan Chase Bank National Association, Michael Sill appealed a final judgment of foreclosure entered in favor of JPMorgan Chase Bank ("Chase"), in which he asserted three issues. 4D14-1014, 2016 WL 67256 (Fla. 4th DCA Jan. 6, 2016). Of note, is Mr. Sill's third contention arguing that Chase was required to send a new notice of default after it voluntarily dismissed the first suit and before it filed the second suit. The Fourth DCA affirmed on all issues, but it wrote an opinion to address the sole issue of whether a new notice of default was required to be sent by ...
With its recently-issued opinion in Elsman v. HSBC Bank USA as Trustee for MLMI 2006-AF1, slip op. 5D14-1753, 41 Fla. L. Weekly D57b, 2015 WL 9491875 (Dec. 31, 2015), the Fifth DCA has added to a growing body of case law regarding what is required to evidence a plaintiff's standing to foreclose a mortgage. In Elsman, the plaintiff asserted standing as holder of the promissory note at issue but failed to attach an endorsed copy of the promissory note at issue to its complaint or to present any alternate evidence of its status as holder. Because the plaintiff, HSBC Bank USA, as Trustee for MLMI ...
In Bank of America, N.A. v. Kipps Colony II Condominium Association, Inc., the Second District Court of Appeal reversed a 2011 final judgment entered in favor of Kipps Colony II Condominium Association, Inc. ("Association"). See Nos. 2D14-858, 2D14-4436, 2015 WL 8321268 (Fla. 2d DCA Dec. 9, 2015). Though Bank of America had been defaulted in the Association's claim of lien foreclosure action, the appellate court found the trial court erred in denying Bank of America's Florida Rule of Civil Procedure 1.540(b) motion. Judge Black delivered the opinion of the court finding that the ...
In Surloff v. Regions Bank, et al., No. 4D14-842, 2015 WL 7275207 (Fla. 4th DCA Nov. 18, 2015), the Fourth District Court of Appeal of Florida was faced with the issue of whether Regions Bank (the "Bank") had any duty or "special relationship" with its client that would subject the Bank to liability for its client's suicide. The issue arose after the trial court granted the Bank's motion to dismiss Plaintiff Cheri Surloff's (as personal representative of the Estate of Arthur B. Surloff) (the "Plaintiff") claims of negligent undertaking and negligent infliction of emotional ...
In Ensler v. Aurora Loan Servs., LLC, the Fourth District Court of Appeal of Florida was faced with the issue of whether a prior mortgage loan servicer's documents could be introduced into evidence when the current servicer testified the prior servicer's records were "accurate" because "[t]hey're a reputable big company and we trust them and they trust us." At trial, Plaintiff sought to introduce the following documents into evidence (through the testimony of the current servicer): the breach letter, payment history, and power of attorney. All of these documents were authored ...
On July 29, 2015, Florida's Second District Court of Appeal held that substantial compliance, rather than strict compliance, is the legal standard for evaluating a foreclosing plaintiff's compliance with contractual conditions precedent to acceleration of mortgage debt (and in particular, the conditions identified in paragraph 22 of most standard residential first mortgages). Green Tree Servicing, Inc. v. Milam, 2015 WL 4549200, at 4-5, 2015 Fla. App. LEXIS 11324, at 9-11. The Milam decision built upon and clarified prior case law from Florida's Second and Fifth DCAs that ...
The Eleventh Circuit Court of Appeals and Georgia Court of Appeals recently issued competing orders about mortgage borrowers' standing to challenge security deed assignments. Though the Eleventh Circuit affirmed that borrowers cannot challenge their security deed assignments when making wrongful foreclosure claims, the Georgia Court of Appeals found that borrowers can challenge their assignments under Georgia's Quiet Title Act. This newly-clarified distinction will perhaps provoke borrowers to file quiet title actions to frustrate Georgia foreclosure efforts in the ...
In Haynes v. McCalla Raymer, LLC, No. 14-14036, __ F. 3d __, 2015 WL 4188459 (11th Cir. July 13, 2015), the Eleventh Circuit Court of Appeals affirmed the Northern District of Georgia's grant of summary judgment in favor of Bank of America, N.A. ("BANA") on the mortgagors' wrongful foreclosure claim. The court held that the mortgagors lacked standing to challenge any alleged deficiencies in the assignment of the security deed from MERS to BANA and that the borrowers' own default, rather than any alleged defect in the foreclosure notice, led to the foreclosure. With respect to the ...
On June 1, 2015, the United States Supreme Court issued its decision in Bank of America, N.A. v. Caulkett, in which all nine Justices joined in an opinion that reversed an Eleventh Circuit ruling that chapter 7 debtors may "strip off" wholly unsecured junior liens. The Caulkett opinion largely relies upon the Supreme Court's prior decision in Dewsnup v. Timm, 502 U.S. 410 (1992), in which the Court held that a chapter 7 debtor may not "strip down" liens where the value of the property partially secures the underlying claim. The Eleventh Circuit previously recognized but distinguished ...
In Deutsche Bank Nat'l Trust Co. v. Adriana Avila-Gonzalez, 2015 WL 2089094 (Fla. 3d DCA May 6, 2015), the Florida Third District Court of Appeal reversed a trial court order that dismissed a foreclosure action with prejudice and cancelled the note and mortgage. Central to the Court's ruling was the determination that the Bank was negligent in asserting the note was lost, by pleadings and by affidavit, when the note was actually in the servicing agent's possession for the duration of the foreclosure action. Contrary to the trial court's ruling, the Court found the Bank's negligence did ...
In Roth v. CitiMortgage Inc., 2014 WL 2853549 (2nd Cir. June 24, 2014), the Second Circuit held that although a mortgage had three letters requesting various mortgage related information sent by her lawyer, the mortgagor's RESPA claim was properly dismissed on the basis that her lawyer's letters were not sent to CitiMortgage's designated QWR address. Accordingly, the requests were not QWRs under RESPA and did not trigger CitiMortgage's QWR duties under RESPA. In Roth, Defendant CitiMortgage Inc. serviced a second residential mortgage for Plaintiff Patricia Roth. Roth alleged ...
In Bryan v. Federal National Mortgage Association, 2014 WL 2988097 (M.D. Fla. July 2, 2014), plaintiffs alleged violations of RESPA and the applicable regulations set forth in 24 C.F.R. § 3500 and 12 C.F.R. § 1024.30, et seq. (Regulation X) against Seterus and Fannie Mae, respectively. The facts alleged that Fannie Mae was the "master servicer" of the note and mortgage, and Seterus was the "subservicer" of the note and mortgage. Specifically, plaintiffs alleged that defendants Seterus, and Fannie Mae by the failure of Seterus, failed to take timely action to respond to ...
Chief Judge Karen S. Jennemann of the United States Bankruptcy Court for the Middle District of Florida, Orlando Division recently held in a soon-to-be published opinion that chapter 7 debtors who state an intention to surrender real property to the mortgagee must perform on that intention by not impeding or interfering with the state court foreclosure process. In the case, In re Plummer, - B.R. -, 2014 WL 1248039 (Bankr. M.D. Fla. March 25, 2014), the Bankruptcy Court also held that, while the statute is not a mere notice provision, surrender does not require a debtor to take any ...
In Hunter v. Aurora Loan Services, LLC, Case No. 1D12-6071 (Fla. 1st DCA March 4, 2014), the First District Court of Appeals found that a lender must lay the necessary foundation under the business records exception to admit documentation from a prior servicer into evidence. Florida Statutes, § 90.803(6) states that the party seeking admission of hearsay under the business records exception must establish four things. First, that the record was made at or near the time of the event; second, that the record was made by or from information transmitted by a person with knowledge; third ...
In Bermuda Dunes Private Residents, etc. v. Bank of America, 5D12-4218, 2014 WL 885720 (Fla. Dist. Ct. App. Mar. 7, 2014) Florida's Fifth District Court of Appeal issued an important opinion concerning the so-called "safe-harbor" for past due condominium assessments created by Fla. Stat. § 718.116(b) for those who acquire title to condominiums from the foreclosure of a first mortgage. The facts of the case were as follows: Bank of America held a first mortgage on a condominium, and assigned the mortgage to Federal Home Loan Mortgage Corporation ("Freddie Mac"). Freddie Mac then ...
Cataldi v. New York Community Bank (N.D. GA Feb. 3, 2013) (Loss Mitigation & Dual Tracking)
This action involves one of the first decisions issued pursuant to the new mortgage servicing regulations under the "Dodd-Frank Wall Street Reform Act and Consumer Protection Act." Plaintiff sought injunctive relief for violation of the Act, including a claim that the Defendant did not fairly offer and negotiate loss mitigation options and pursued "dual track" foreclosure. The facts established that the parties engaged in modification negotiations, that one or more modifications ...
The Eleventh Circuit Court of Appeals held in Faire Feaz v. Wells Fargo Bank, N.A., et al., No. 13-10230 (11th Cir. Feb. 10, 2014), that a lender may require a borrower who has a federally-insured mortgage to obtain more flood insurance than the amount required under federal law. Feaz had obtained a mortgage loan that was guaranteed by the Federal Housing Administration ("FHA"). Feaz's mortgage contained the following covenant, which is required by federal law for all FHA-guaranteed mortgages:
Fire, Flood and Other Hazard Insurance. Borrower shall insure all improvements on the ...
In Richardson v. Wells Fargo, N.A., No. 13-10002 (5th Cir. 2014), the United States Court of Appeals for the Fifth Circuit held that motions for attorney's fees provided by contract are permissible in accordance with Fed. R. Civ. P. 54(d)(2). This rule provides that "a claim for attorney's fees and related nontaxable expenses must be made by motion unless the substantive law requires those fees to be proved at trial as an element of damages." Plaintiff Pamela Richardson obtained a loan from Wells Fargo to refinance the mortgage on her property. Plaintiff secured the debt with a deed of ...
The U.S. Court of Appeals for the Fifth Circuit recently held in Reinagel v. Deutsche Bank National Trust Co., No. 12-50569, 2013 WL 3480207 (5th Cir. July 11, 2013), that facially valid assignments can only be challenged for want of authority by the defrauded assignor. In Reinagel, the plaintiffs/borrowers alleged that the "robo-signed" assignments of their note and deed of trust were invalid and prohibited the defendant's foreclosure. First, the Fifth Circuit found the plaintiffs had standing to challenge the validity of the assignments of the note and deed of trust to Deutsche ...
In Young v. Wells Fargo, Case No. 12-1405 (1st Cir. May 21, 2013), the First Circuit Court of Appeals reversed a district court's dismissal of plaintiff Susan Young's breach of contract claim premised on Wells Fargo's alleged failure to comply with its obligations under the Trial Period Plan ("TPP"), a temporary loan modification period during which Young applied for a permanent loan modification. Young alleged that, after falling behind on her mortgage payments, she entered into a series of discussions with Wells Fargo in an attempt to negotiate a loan modification. Eventually ...
A judge in North Carolina recently dismissed an action brought by Guilford County's Register of Deeds against twenty-nine defendants, including Mortgage Electronic Registration Systems ("MERS"), for a lack of legal standing to bring their claims, in Guilford Cty, ex rel. Jeff L. Thigpen, Guilford Cty. Register of Deeds v. Lender Processing Services, Inc., 12 CVS 4531 (N.C. Gen. Ct. J. Super. Ct. Div. May. 29, 2013). The Register of Deeds of Guilford County filed the civil action on behalf of Guilford County making several state law claims against the defendants, including unfair ...
In You et al. v. JP Morgan Chase Bank, N.A. et al., No.S13Q0040(Ga. May 20, 2013), the Supreme Court of Georgia ruled that the holder of a security deed seeking to exercise a power of sale is not required to also hold the underlying promissory note. Further, the Court held that a party exercising its right to foreclose as a holder of the security deed does not need to identify the holder of the note in the statutorily-mandated notice to debtor. The borrowers in this case primarily argued that JP Morgan Chase Bank, N.A. did not have the right to exercise power of sale because it was not the holder of ...
In early 2010, the Florida Supreme Court amended Rule 1.110(b) of the Florida Rules of Civil Procedure to require that all residential foreclosure complaints be verified. The Rule requires a simple recitation:
Under penalties of perjury, I declare that I have read the foregoing, and the facts alleged therein are true and correct to the best of my knowledge and belief.
Fla. R. Civ. P. 1.110. Despite this straightforward language, foreclosure defendants regularly rely on this rule to seek dismissal of a foreclosure action on a variety of theories. Nonetheless,Florida Appellate ...In City of Palm Bay v. Wells Fargo Bank, N.A., No. SC11-830 (Fla. May 16, 2013), the Supreme Court of Florida ruled that a municipal ordinance superiority provision is invalid as conflicting with state law. The certified question the Court considered was the following: Whether under Article VIII, section 2(b), Florida Constitution, section 166.021, Florida Statues and Chapter 162, Florida Statutes, a municipality has the authority to enact an ordinance stating that its code enforcement lien, created pursuant to a code enforcement board order and recorded in the public records of ...
In Topchian v. JPMorgan Chase Bank, N.A., Case No. 12-0910-CV-W-ODS, 2013 WL 1628525 (W.D. Mo. April 16, 2013), the Western District Court of Missouri granted Defendant, JPMorgan Chase Bank, N.A.'s ("Defendant") motion to dismiss pro se Plaintiff, Samvel Tochian's ("Plaintiff"), Amended Complaint for the alleged failure to provide adequate opportunity to the federal Home Affordable Modification Program ("HAMP") and related claims. See generallyid. The District Court, citing various prior court holdings, held that there is not private right of action for loan ...
In Wells Fargo Bank v. Bohatka, et al., 38 Fla. L. Weekly D885a (Fla. 1st DCA April 22, 2013), the Florida First DCA reversed dismissal with prejudice of a residential foreclosure complaint. While the appellate court agreed that dismissal of the complaint was proper, it held that dismissal with prejudice was not. The trial court erred by going beyond the four corners of the complaint on the borrowers' motion to dismiss. In its foreclosure complaint, Wells Fargo alleged that it was the owner and holder of the subject promissory note and mortgage by virtue of an equitable transfer which ...
The Florida Fourth DCA opinion in Shahar v. Green Tree Servicing, 38 Fla. L. Weekly D563d (Fla. 4th DCA March 6, 2013) demonstrates the dangers of inadequately addressing each and every affirmative defense raised by a foreclosure defendant. In Shahar, the appellate court reversed the trial court's entry of summary judgment where the lender did not factually or legally refute the defendants' unclean hands defense. The defendants' Verified Amended Answer, Affirmative Defenses and Counterclaim included allegations that the lender had engaged in a variety of inequitable and ...
John Chiles and Zachary Miller were recently published in the American Bar Association's The Business Lawyer (Vol. 68, No. 2) with an article entitled: The Supreme Court Settles a Decade-Long Debate -- 2012 Survey of RESPA Developments. The article highlights important decisions issued by U.S. federal courts addressing the Real Estate Settlement Procedures Act ("RESPA") during 2012. Of particular importance is the Supreme Court's decision in Freeman v. Quicken Loans, Inc., 132 S.Ct. 2034, --- U.S. ---- (2012), in which the Court unanimously settled a long-standing split in ...
In Wassef v. JPMorgan Chase Bank, N.A., No. CV-12-02480-PHX-DGC, 2013 WL 1123678 (D. Ariz. Mar. 18, 2013), the United States District Court for the District of Arizona granted a motion to dismiss where the claims were premised on an alleged repayment agreement. There, the plaintiffs had taken out a loan from Chase Bank, N.A. to refinance their home. The loan was secured with a deed of trust on the property. The plaintiffs later entered into a HAMP modification agreement with Chase, but they were unable to make their payments under the modification. The plaintiffs alleged that Chase ...
As Burr & Forman has offices located in five southeastern states (Alabama, Florida, Georgia, Mississippi and Tennessee), our attorneys have been actively involved in various forms of litigation involving Chinese drywall for the last several years. While standard Chinese drywall lawsuits have involved claims related to construction and products liability, a recent case handled by our financial services litigation attorneys involved the interplay between Chinese drywall and mortgage servicing. In Buckentin v. SunTrust Mortgage Corporation, No. 2:11-cv-00532-RDP, 2013 WL ...
The Tenth Circuit issued an opinion last week in Berneike v. CitiMortgage, Inc., 2013 WL 657032 (10th Cir. Feb. 25, 2013), addressing whether a district court properly dismissed a borrower's Real Estate Settlement Procedures Act ("RESPA") claim against CitiMortgage, Inc. ("Citi"). The subject complaint alleged that CitiMortgage, by failing to respond to multiple qualified written requests ("QWRs"), violated RESPA. On three different occasions in early 2010, the borrower sent a barrage of faxes to Citi, each alleging that Citi was improperly servicing the borrower's ...
Oratai Culhane v. Aurora Loan Services of Nebraska
United States Court of Appeals
First Circuit
February 15, 2013
Relevant Facts: In April 2006, Culhane refinanced a mortgage on her single family home and delivered a promissory note to Preferred Financial Group, Inc. d/b/a Preferred Mortgage Services (the "Lender" or "Preferred"). Culhane simultaneously executed a mortgage in favor of MERS as nominee for Preferred and Preferred's successors and assigns. After making the loan, Preferred transferred Culhane's note to Deutsche Bank Trust Company Americas ("Deutsche" ...Declining to follow the majority of district court decisions within its circuit, the U.S. Court of Appeals for the Sixth Circuit, in Glazer v. Chase Home Finance LLC, --- F.3d ---, 2013 WL 141699 (6th Cir. Jan. 14, 2013), recently held that mortgage foreclosure constitutes debt collection under the Fair Debt Collection Practices Act ("FDCPA"). A borrower filed suit against his mortgage servicing company and its debt collection law firm, alleging violations of the FDCPA and state law arising out of a foreclosure action. The mortgage servicer and law firm moved to dismiss Glazer's ...
In Pennell v. Wells Fargo Bank, N.A., No. 12-60595 (5th Cir. 2013), the Fifth Circuit Court of Appeals had the occasion to address what constitutes a negligent misrepresentation under Mississippi law when a borrower and bank are negotiating a loan modification in an attempt to avoid foreclosure. The plaintiffs filed a lawsuit against the defendant mortgage servicing company after their home had been sold at a non-judicial foreclosure sale. The plaintiffs asserted a variety of claims, including, inter alia, wrongful foreclosure, slander of title, intentional and negligent ...