REFinBlog

Editor: David Reiss
Brooklyn Law School

December 7, 2015

Equitable Subrogation in Mortgage Refinancing

By David Reiss

Freyermuth-Wilson1

Professor Freyermuth

I am speaking on Equitable Subrogation in Mortgage Refinancing and Land Purchase Transactions in an ABA Professor’s Corner webinar on Wednesday with Professor Wilson Freyermuth of the University of Missouri School of Law. If this sounds like an esoteric topic, it is!

Subrogation refers to the substitution of one party for another and equitable subrogation refers to the doctrine where a court may use its equitable powers to find an implied assignment of a mortgage in order to avoid the unjust enrichment of a party. Since the commencement of the foreclosure crisis, this doctrine has been put to the test. Wilson and I will take a look at some of the recent cases that do the testing. More info about the webinar is below:

Professors’ Corner

FREE monthly webinar featuring a panel of law professors, addressing topics of interest to practitioners of real estate and trusts/estates. All are welcome and encouraged to register and participate.

Wednesday, December 9, 2015

12:30 p.m. Eastern/11:30 a.m. Central/9:30 a.m. Pacific

Equitable Subrogation in Mortgage Refinancing and Land Purchase Transactions

Speakers:  

David Reiss, Brooklyn Law School

Wilson Freyermuth, University of Missouri School of Law

When a lender makes a mortgage loan to refinance an existing first mortgage, the lender typically expects its refinancing loan to have first priority.  If there is an intervening lien on the mortgaged property, however, a priority dispute may result in which the intervening lienholder argues that the recording statutes give it priority over the refinancing lender’s mortgage lien.

In this situation, the principle of equitable subrogation may apply to allow the refinancing lender to be subrogated to the priority of the paid-off mortgage so as to obtain priority over the intervening lien.  The Restatement (Third) of Property: Mortgages (1997) embraced the liberal application of equitable subrogation in this context.  While many courts have embraced the Restatement approach, not all courts have embraced the Restatement approach (including a recent Delaware Supreme Court decision rejecting the application of equitable subrogation in the refinancing context).

Our speakers will discuss a series of recent decisions (all decided in the 2015 calendar year) addressing the extent to which equitable subrogation is (or should be) available in the mortgage refinancing and land purchase context.

Register for this FREE webinar at http://ambar.org/ProfessorsCorner.

Sponsored by the ABA Real Property, Trust and Estate Law Section, Legal Education and Uniform Laws Group.

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