Illinois Court Finds Statute of Limitation Barres TILA & Fraud Claims
The court in deciding Gater v. Bank of Am., N.A., 2013 U.S. Dist. LEXIS 149872 (N.D. Ill. 2013) granted Bank of America’s motion to dismiss.
Plaintiff alleged violations of Truth-in-Lending Act (TILA), 15 U.S.C. §§ 1601, et seq. claim (Count I), and an Illinois Consumer Fraud and Deceptive Business Practices Act (Fraud Act), 815 ILCS 505/1, et seq. claim (Count II). Bank of America moved to dismiss the action.
The court found that the statute of limitations periods barred plaintiff’s claims, thus the court granted the motion to dismiss.
December 24, 2013 | Permalink | No Comments
Washington Court Dismisses Plaintiff’s State Consumer Protection Act Claim
The court in deciding Massey v. BAC Home Loans Servicing LP, 2013 U.S. Dist. LEXIS 148402 (W.D. Wash. 2013) granted the defendant’s motion for summary judgment pursuant to Federal Rule of Civil Procedure 56.
Plaintiff Cindy T. Massey claimed that Northwest Trustee’s conduct in connection with the nonjudicial foreclosure proceedings on her property violated the Washington Consumer Protection Act (“CPA”). Ms. Massey had not filed an opposition to Northwest Trustee’s motion for summary judgment. The court considered Northwest Trustee’s motion, all submissions filed in support, the applicable law, and the balance of the record. After considering the arguments, the court eventually granted Northwest Trustee’s motion.
December 24, 2013 | Permalink | No Comments
December 23, 2013
A Shared Appreciation for Underwater Mortgages
New York State’s Department of Financial Services has proposed a rule that would allow for “shared appreciation” of a property’s value if an underwater loan is refinanced. The Department states that this will provide a helpful option for underwater homeowners facing foreclosure. If a homeowner were to take a shared appreciation mortgage, he or she would get a principal reduction (and thus lower monthly payments) in exchange for giving up as much as fifty percent of the increase in the home’s value, payable when the property is sold or the mortgage is satisfied.
The precise formula for the holder of the mortgage is as follows:
The Holder’s share of the Appreciation in Market Value shall be limited to the lesser of:
1. The amount of the reduction in principal (deferred principal), plus interest on such amount calculated from the date of the Shared Appreciation Agreement to the date of payment based on a rate that is applicable to the Modified Mortgage Loan; or
2. Fifty percent of the amount of Appreciation in Market Value. Section 82-2.6(b).
The principal balance of a shared appreciation mortgage “shall be no greater than: (i) an amount which when combined with other modification factors, such as lower interest rate or term extension, results in monthly payments that are 31% or less of the Mortgagor’s DTI; or (ii) 100% of the Appraised Value.” Section 82-2.11(i). The proposed regulation contains mandatory disclosures for the homeowner, including some examples of how a shared appreciation mortgage can work.
How does this all play out for the homeowner? We should note that similarly situated homeowners can be treated differently in a variety of ways. Here are a few examples. First, two similarly situated homeowners with different incomes can receive different principal balances because of the DTI limitation contained in section 82-2.11(i). Second, similarly situated homeowners can receive different principal balances because their houses appraise for different amounts. And third, different rates of appreciation of homes can make two similarly situated homeowners give up very different absolute dollars in appreciated value.
All of this is to say that homeowners will have to consider many variables in order to evaluate whether a share appreciation mortgage is a good option for them. They should also know that what is a good deal for one homeowner may not be a good deal for a similarly situated one. It is unlikely that the mandatory disclosures will be sufficient to explain this to them in all of its complexity. It is not even clear that loan counselors could do a great job with this either.
I am not arguing that the share appreciation mortgage is a bad innovation. But I do think that lenders will be able evaluate when offering one is a good deal for them while homeowners may have trouble evaluating when accepting one is a good deal on their end. I would guess that many may take one for non-economic reasons — I want to keep my home — and just take their chances as to how it all will play out financially.
December 23, 2013 | Permalink | No Comments
Supreme Court of Vermont Denied a Motion Requesting a Declaration That U.S. Bank Had Violated Vermont’s Consumer Fraud Act (CFA)
The court in deciding Dernier v. Mortgage Network, Inc., 2013 VT 96 (Vt. 2013) reversed the trial court’s dismissal of the counts that alleged irregularities in the transfer of the note and mortgage unconnected to the PSA. The court also partially remanded certain claims.
Plaintiff borrowers brought suit against defendant bank in which they sought a declaratory judgment that defendant had no right to enforce either a note or a mortgage and that defendant had violated the Consumer Fraud Act (CFA).
Plaintiffs appealed the dismissal for failure to state a claim, of their action for (1) a declaratory judgment that defendant U.S. Bank National Association cannot enforce the mortgage and promissory note for the debt associated with plaintiffs’ purchase of their house based on irregularities and fraud in the transfer of both instruments, (2) a declaration that U.S. Bank has violated Vermont’s Consumer Fraud Act (CFA) by asserting its right to enforce the mortgage and note, and (3) attorney’s fees and costs under the CFA.
Plaintiffs also appealed the trial court’s failure to enter a default judgment against defendant Mortgage Electronic Registration Systems, Inc. (MERS). After considering the merits of both claims, the court ultimately affirmed in part and reversed in part.
December 23, 2013 | Permalink | No Comments
Georgia Court Dismisses Wrongful Foreclosure Claim
The court in deciding Bowman v. U.S. Bank Nat’l Ass’n, 2013 U.S. Dist. LEXIS 149660 (N.D. Ga. 2013) eventually granted the defendant’s motion to dismiss.
Plaintiff’s complaint was wide-ranging and repetitive, the gravamen of the complaint was a wrongful foreclosure claim which was premised on plaintiff’s allegations that: (1) Castle Rock Trustee was not the “secured creditor,” (2) the actual “secured creditor” was not identified to plaintiff in any notice, (3) the Castle Rock Trustee did not send notice of the November 6, 2012, foreclosure sale to plaintiff, (4) the assignments were invalid, and (5) the discharge of the underlying debt in a Chapter 7 bankruptcy case precluded foreclosure.
The court eventually held that plaintiff had fraudulently joined the LLC did not defeat diversity; the value of the property was the appropriate benchmark for the amount in controversy and there was no dispute that tax records value the property at $188,900. The court also found that plaintiff’s Chapter 7 discharge did not bar defendants from initiating foreclosure proceedings against the property nor did the Chapter 7 discharge render “false” defendants description that plaintiff had failed to pay the mortgage debt.
The court also found that plaintiff’s complaint failed to state a claim for wrongful foreclosure due to errors in the Foreclosure Notice where the Notice was sent to the property address, which was authorized under the statute, and plaintiff had not alleged that he requested the Notice be sent to an alternate address.
After considering the merits of both claims, the court ultimately agreed with the defendant and granted the defendant’s motion to dismiss, and dismissed with prejudice.
December 23, 2013 | Permalink | No Comments
Michigan Court Dismisses Fraud & RESPA Claims
The court in deciding Neroni v. Bank of Am., N.A., 2013 U.S. Dist. LEXIS 149190 ( E.D. Mich. 2013) eventually granted the defendant’s motion to dismiss.
Plaintiffs alleged claims against defendant [Bank of America, N.A.] for infringement of the Real Estate Settlement Procedures Act (“RESPA”) (Counts I–IV), common law fraud (Count V), common law silent fraud (Count VI), and common law breach of contract (Count VII).
Defendant responded by asserting that plaintiffs’ RESPA claims should be dismissed because (1) defendant had no legal obligation under RESPA to respond or, alternatively, (2) plaintiffs failed to plead any actual damages related to their RESPA claims. Defendant further asserted that plaintiffs had failed to adequately plead claims for fraud or breach of contract relating to defendant’s legal standing to foreclose on Plaintiffs’ Home.
After considering the merits of both claims, the court ultimately agreed with the defendant and granted the defendant’s motion to dismiss.
December 23, 2013 | Permalink | No Comments
December 24, 2013
Michigan Court Dismisses MCPA & HOEPA Claims
By Ebube Okoli
The court in deciding Huff v. Fannie Mae, 2013 U.S. Dist. LEXIS 148053 (E.D. Mich. Oct. 2013) granted Bank of America’s motion to dismiss.
Plaintiff advanced a claim against defendants for quiet title (Count I) and alleged that defendants violated the Michigan Consumer Protection Act (“MCPA”) (Count II). In response plaintiff filed a motion to dismiss for failure to state a claim.
Defendants asserted that all of the plaintiff’s claims should be barred either by res judicata or by the expiration of the applicable statute of limitations. Additionally, defendants argued that plaintiff’s quiet title claim; claims under the MCPA, and HOEPA lacked the factual allegations required for the court to find in plaintiff’s favor.
Plaintiff asserted that his complaint adequately plead claims against defendants for quiet title and violations of state and federal law. The court ultimately found that plaintiff failed to state a claim upon which relief may be granted.
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December 24, 2013 | Permalink | No Comments