December 13, 2013
Plaintiffs Failed to Allege Facts Sufficient to Set Aside the Foreclosure Sale After the Expiration of the Statutory Redemption Period
The court in deciding Glover v. JPMorgan Chase Bank, N.A., 2013 U.S. Dist. LEXIS 149354 (E.D. Mich. 2013) granted defendant’s motion to dismiss plaintiffs’ complaint pursuant to F.R.C.P. 12(b)(6).
All of the plaintiffs’ claims stemmed from the defendant’s purported refusal to modify the plaintiffs’ mortgage obligations due to “title issues.” However, the plaintiffs’ allegations did not support their claims because the parties entered into a modification agreement in October of 2010. Consequently, since the defendant did in fact grant the plaintiffs a loan modification, the court found that their claim lacked any factual support suggesting that the defendant was liable to plaintiffs.
Additionally, the court noted that the plaintiffs had failed to allege facts sufficient to set aside the foreclosure sale after the expiration of the statutory redemption period. Once the redemption period following a foreclosure of a parcel of real property has expired, the former owner’s rights in and title to the property are extinguished.
The court dismissed the plaintiff’s claims.
December 13, 2013 | Permalink | No Comments
Michigan Court Finds That Defendants Were Not Acting Under Color of State Law
The court in deciding El-Jabazwe v. Wells Fargo Home Mortg., 2013 U.S. Dist. LEXIS 149854 ( E.D. Mich. Oct. 18, 2013) denied the plaintiff’s motions and granted the defendants’ motions.
Plaintiff’s complaint listed the following Counts: 42 U.S.C. §1983 (Count I); 42 U.S.C. § 1985(3) (Count II); 42 U.S.C. § 1983: refusing or neglecting to prevent (Count III); Malicious Abuse of Process (Count IV); 18 U.S.C. §§ 241 and 242 (Count V); Intentional Infliction of Emotional Distress (Count VI); and Mail Fraud (Count VIII). The Court dismissed Plaintiff’s state-law claims (Counts IV and VI) on March 6, 2013.
The court found that the plaintiff’s argument under Fed. R. Civ. P. 12(c) rested solely on conclusory statements. The court found plaintiff’s motion for summary judgment is similarly deficient. The court noted that plaintiff wholly failed to meet the evidentiary burdens required under Fed. R. Civ. P. 12(c) and 56(a), and thus the court denied both of Plaintiff’s motions. Lastly, the court found that even when construing the facts in a light most favorable to the plaintiff, Counts I and III must be dismissed against the defendants, as they were not acting under color of state law.
Consequently, pursuant to E.D. Mich. L.R. 7.1(f)(2), the court ordered that the motions be resolved on the briefs submitted, without oral argument. The court then denied the plaintiff’s motions and granted the defendants’ motions.
December 13, 2013 | Permalink | No Comments
December 12, 2013
Reiss on New Mortgage Rules
The Redding Record Searchlight interviewed me in Experts Worry New Loan Standards, Lending Limits Could Hurt Housing Market. It reads in part,
New mortgage qualification rules and lower FHA lending limits that take effect next year threaten to slow the housing market’s recovery.
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David Reiss, a law professor at Brooklyn Law School in New York, said there is nothing wrong with tying the price of a loan to the risk.
“There is some talk that if it’s not a Qualified Mortgage loan, the cost for the creditor or lender will be higher and the cost will be passed on to the homeowner. That will probably be true,” Reiss said.
But Lawrence of Silverado Mortgage said just because one in five loans written today wouldn’t pass Qualifying Mortgage muster doesn’t necessarily suggest the loan would not be approved and closed under the new standards.
“Making a minor adjustment such as using a different interest rate and closing cost combination may allow a loan to meet the standard that it wouldn’t otherwise,” Lawrence said.
Lawrence knows there will be some loans for which an alternative can be found to resolve a Qualifying Mortgage issue.
“But I think most buyers start with getting pre-qualified before they find the home they’re interested in purchasing,” Lawrence said.
December 12, 2013 | Permalink | No Comments
Missouri Court Dismisses Predatory Lending & TILA Claims
The court in deciding Fleming v. Bank of Am., 2013 U.S. Dist. LEXIS 150758 (W.D. Mo. Oct. 21, 2013) found the plaintiff’s argument and complaint to be filled with legal conclusions and disjointed, conclusory allegations. The court noted that the complaint frequently referred simply to “Defendant” or “Defendants” with no indication as to which specific defendant was implicated, and sometimes seemed to confuse “Plaintiff” with “Defendant.”
Plaintiff asserted the following eight claims: (1) predatory lending and violations of the Truth in Lending Act (“TILA”), 15 U.S.C. §§ 1601 et seq.; (2) servicer fraud; (3) violations of the Home Ownership and Equity Protection Act (“HOEPA”)’s amendments to TILA, §§ 1639 et seq.; (4) violations of the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. §§ 2601 et seq.; (5) breach of fiduciary duty; (6) identity theft; (7) civil liability under the Racketeering Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1964; and (8) quiet title to real property.
Pursuant to Federal Rule of Civil Procedure 12(b)(6), defendants moved to dismiss Fleming’s complaint for failure to state a claim. After considering the plaintiff’s arguments the court ultimately granted defendants Bank of America and MERSCorp Holdings, Inc.’s motion to dismiss.
December 12, 2013 | Permalink | No Comments
Michigan Court Dismisses Claim Seeking $4,500,000.00 in Damages
The court in deciding Kemp v. Resurgent Capital Servs., 2013 U.S. Dist. LEXIS 150713 ( E.D. Mich. Oct. 21, 2013) ultimately dismissed the plaintiff’s claim and request for $4,500,000.00.
The complaint made the following claims: Count I lack of standing, Count II and III common law fraud and injurious falsehood, Count IV violation of Fair Debt Collection Practices Act, Count V violation of Truth in Lending Act, Count VI violation of UCC 3-302, Count VII negligent undertaking, and Count VIII negligent misrepresentation.
The plaintiff essentially claimed that defendants wrongfully foreclosed on her property. Due to this wrongful foreclosure, she sought a declaration that she was the rightful owner of the property. She further sought a money judgment in the amount of $4,500,000.00.
The court considered the plaintiffs arguments and ultimately dismissed her claim.
As to Count I, the court found that this claim failed against Quicken Loans for the simple reason that Quicken Loans had no interest in either loan and had no role in the foreclosure proceedings. As to the remaining counts, the court found that Quicken Loans was correct in that the plaintiff’s claims were barred by the applicable statute of limitations.
December 12, 2013 | Permalink | No Comments
December 11, 2013
Michigan Court Dismisses Fair Debt Collection Practices Act Claim
The court in deciding Mullins v. Fannie Mae, 2013 U.S. Dist. LEXIS 150718 (E.D. Mich. 2013) granted the defendant’s motion to dismiss.
The plaintiff brought six causes of action: Count I—Fraudulent Misrepresentation; Count II—Estoppel; Count III—Negligence; Count IV—Violation of the Regulation of Collection Practices Act; Count V—Violation of the Fair Debt Collection Practices Act; and Count VI—violation of the Michigan Consumer Protection Act.
The court dismissed the plaintiff’s fraud claims because the plaintiff had not provided a signed writing by an authorized representative of Fannie Mae regarding a promise to modify her loan. The court noted that even if she had stated a claim of fraud, her claim must be dismissed.
With regards to the plaintiff’s negligence claims, the court found that Fannie Mae had no duty to review, thus there could be no breach.
Under Michigan law, the Regulation of Collection Practices Act (“RCPA”) governs the collection practices of certain persons. However, after considering the plaintiff’s argument, the court found that the statute did not authorize a claim based upon a plaintiff’s reluctance to dispute the validity of a debt because of the timing of the validation. Citing similar grounds, the court ultimately dismissed the remaining claims.
December 11, 2013 | Permalink | No Comments
Reiss on Watt Confirmation
Law360 interviewed me about the Senate confirmation of Mel Watt as the Director of the Federal Housing Finance Agency in Fannie, Freddie’s Footprint Could Grow Under New FHFA Head. The article reads in part,
The U.S. mortgage industry is in for a sea change as Rep. Mel Watt, D-N.C., takes the helm of the Federal Housing Finance Agency, experts say, predicting Watt will seek to expand Fannie Mae and Freddie Mac, veering sharply from his predecessor’s plans but lining up more closely with President Barack Obama’s.
The confirmation came Tuesday in a 57-41 vote after months of delay ended by Senate Democrats’ implementation of the so-called “nuclear option” eliminating the filibuster of presidential nominees. Senate Republicans had expressed concern about the choice of a politician like Watt — as opposed to an academic or economist — to head the agency.
Members of the real estate finance community are also divided about whether Watt’s confirmation will have a positive or negative impact on the industry, but most agree that a major change is ahead.
“I think Watt, as director, could end up having a very big impact both in terms of reversing some changes that have been implemented, and also taking the agency in a very different direction,” said David Reiss, a professor at Brooklyn Law School.
Since 2009, interim FHFA head Ed DeMarco has made an effort to shrink the footprint of the regulator and its government-sponsored enterprises, Fannie and Freddie, in the U.S. residential mortgage market.
DeMarco faced pushback in these efforts from industry groups and lawmakers, causing him to backpedal a bit in November when the FHFA announced that it would hold off on reducing the size of mortgages that Fannie and Freddie can guarantee for at least the first half of next year.
Obama also did not share DeMarco’s ideology, but experts believe Watt’s plans for the GSEs are much more in line with those of the president. He appears cautious about allowing Fannie and Freddie to back away from the market entirely and may in fact favor policies that will increase the GSEs’ role in the mortgage market.
“My guess is that Watt will further enmesh Fannie and Freddie in the operations of the mortgage markets, whereas DeMarco was actually shrinking their footprint,” Reiss said.
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The difference between the short-term and long-term impacts of Watt’s expected actions will be significant, experts say.
DeMarco’s moves made short-term waves, but supporters believed the aim was long-term equilibrium and an eventual balance of public and private capital in the mortgage market. Watt may have more potential for positive short-term results, but there will still be a question as to whether this will translate into a stable market for the next generation, Reiss said.
“Often when people are talking about government intervention, they want help for problems now, but they’re also setting up the rules of the game for once the crisis has passed,” he said.
December 11, 2013 | Permalink | No Comments
