Tag Archives: foreclosure

Washington Court Dismisses Fair Debt Collection Practices Act and Washington Deed of Trust Act Violation Claims

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The court in deciding Dietz v. Quality Loan Serv. Corp., 2014 U.S. Dist. (W.D. Wash. Jan. 3, 2014) granted Wells Fargo and MERS’ motion to dismiss.

This action involved is a post-sale wrongful foreclosure case. Plaintiff Timothy Dietz alleged causes of action for violation of the Fair Debt Collection Practices Act (FDCPA)(Counts I and IV) and violation of the Washington Deed of Trust Act (DTA)(Counts II and III).

The court in deciding this case noted that Dietz’s first and fourth causes of action were for violation of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692g(b) and 1692e(5) respectively. These causes of action did not mention MERS  and there was no allegation in the complaint that MERS engaged in any activities that could be construed as a “debt collection.” As such, this court dismissed the FDCPA causes of action against MERS.

Similarly, the court found that Dietz had not alleged facts that gave rise to a violation of the debt validation notice requirements. Dietz’s claim that that Wells Fargo violated 15 U.S.C. § 1641(g) by failing to notify him within 30 days after it purchased the Loan. Wells Fargo purchased the Loan in 2008 and the assignment was recorded in 2011. The court found that under either date, the claim was barred by FDCPA‘s one year statute of limitations, 15 U.S.C. § 1640(e), as this lawsuit was not filed until 2013.

Reiss on Paying off Underwater Mortgages

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MainStreet.com quoted me in What Bills Should You Pay First? It reads in part,

Consumers started prioritizing their mortgage payments ahead of their credit card payments as of September 2013, according to a new TransUnion study.

This reverses a trend that began in September 2008 when the mortgage crisis drove consumers to pay their credit cards bills ahead of mortgages. Consumers have placed an emphasis on paying their auto loans before their mortgages and credit card payments by a wide margin – since at least 2003, TransUnion said. The study obtained anonymous consumer information from December 2002 through December 2012, and each monthly sample included about 2.5 million consumers.

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Many consumers were faced with devaluing home prices and chose to preserve their credit line, said David Reiss, professor of law at Brooklyn Law School in New York.

“The underwater mortgage may have seemed like a sinkhole when prices were dropping and putting limited funds into it might have seemed like throwing good money after bad,” he said. “When a household’s income can’t cover all of its expenses, it has to prioritize its payments. If the mortgage is underwater, it may make sense to use those limited funds to protect assets that are integral to daily living and wage earning like an auto or to focus on tools like credit cards that may have some use going forward, if there is still any available credit left.”

Homeowners have reversed that logic with the rebound of housing prices, Reiss said.”If homeowners have equity in their home from those rising prices, prioritizing the mortgage protects that equity and keeps the household in the house to boot,” he said. “Not everyone makes such a calculation, but many do.”

Appellate Court of Illinois Awarded Summary Judgment to Plaintiff Where Defendant Failed to Show That Plaintiff was an Unlicensed Debt Collector Under the Collection Agency Act

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The Illinois court in deciding Kondaur Capital Corp. v. Sreenan, 2013 Ill. App. (Ill. App. Ct. 1st Dist. 2013) affirmed the judgment of the circuit court granting summary judgment for the plaintiff.

In the summary judgment motion, the plaintiff asserted that it was the legal holder and in possession of the note at issue pursuant to the assignment from PNC.

The court held that the circuit court did not err in awarding summary judgment to the plaintiff where the defendant failed to demonstrate that the plaintiff was an unlicensed debt collector under the Collection Agency Act (225 ILCS 425/1 et seq.).

The court also held that there was no abuse of discretion in refusing to strike affidavits in support of the plaintiff’s motion for summary judgment where the affidavits were premised upon documents that qualified as “business records” under Supreme Court Rule 236 (Ill. S. Ct. R. 236).

Lastly, the court held that any error in allowing the plaintiff to respond to the defendant’s affirmative defenses in the context of the plaintiff’s summary judgment motion was harmless.

Appellate Court of Illinois Denies Defendants’ Motion for Presentment and Cause to Vacate Judgment was Misplaced and Had no Legal Significance

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The Appellate Court of Illinois in deciding Deutsche Bank Nat’l Trust Co. v. Cole, 2013 IL App (2d) 130450-U (Ill. App. Ct. 2d Dist. 2013) held that the trial court properly confirmed a judicial sale, as the plaintiff had no obligation to produce the originals of the mortgage and the note. Moreover under the appropriate standard, the court had subject-matter jurisdiction, and defendant failed to cogently explain plaintiff’s alleged lack of standing.

Lorie Cole, one of two property-owner defendants in a foreclosure action, appealed to this court after the confirmation of the judicial sale of the property and the denial of what the trial court treated as a motion to reconsider. This court, after considering the Cole’s appeal found that all of the issues that defendant Cole had raised were without merit, thus this court affirmed the decision of the lower court.

Hawaiian Court Finds That Foreclosure was Permissible on 1250 Oceanside

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The court in deciding In re 1250 Oceanside Partners, (Bankr. D. Haw., 2013) ultimately came to the conclusion that Oceanside was entitled to foreclose.

The debtor in possession, 1250 Oceanside (Oceanside), sought to enforce a promissory note and foreclose a mortgage made by defendants Lawrence Shaw and Lisa Shaw (the Shaws). The other defendants claimed interests in the mortgaged property. Oceanside now sought summary judgment. The Shaws argued that the court lacked jurisdiction, that Oceanside was not entitled to foreclose, and that if it was entitled to foreclose, it was not entitled to a deficiency judgment.

The court decided that there was no dispute as to any material fact. Oceanside was entitled to foreclose on the property, but it was not entitled to a deficiency judgment against the Shaws at this stage in the litigation.

Tennessee Court Dismisses TILA, RICO, and RESPA Claims

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The Tennessee court in deciding Mhoon v. United States Bank Home Mortg., 2013 U.S. Dist. (W.D. Tenn., 2013) dismissed the complaint of the plaintiff pursuant to 28 U.S.C. § 1915(e)(2)(B)(ii).

Plaintiff [Mhoon] filed a complaint against defendant U.S. Bank. This case was an action to prohibit a non-judicial foreclosure of real property. The complaint alleged that U.S. Bank was engaged in efforts to illegally foreclosure on Mhoon’s home. The complaint also alleged that U.S. Bank acted with gross negligence and violated its duty of good faith.

In addition, the complaint alleged breach of contract because U.S. Bank failed to send any and all acceleration, default, and foreclosure notices to Mhoon in the manner required by the deed of trust.

The complaint further alleged U.S. Bank violated Truth in Lending Act (“TILA”); violated Real Estate Settlement Procedures Act (“RESPA”) by failing to provide a good faith estimate; violated the Racketeer Influenced and Corrupt Organizations Act (“RICO”) statute and engaged in fraud; and lacked standing to initiate foreclosure proceedings on the Property.

The court ultimately held (1) plaintiff has not sufficiently plead a breach of contract claim; (2) plaintiff’s claims for gross negligence and violation of the duty of good faith fail as a matter of law; (3) plaintiff’s allegations based on violations of the TILA and the RESPA were barred by the applicable statute of limitations and failed to state a claim because U.S. Bank was not the originating lender; and (4) plaintiff’s claims for fraud violations of the RICO, and lack of standing all failed as a matter of law.

For those reasons, this court dismissed the plaintiff’s complaint pursuant to 28 U.S.C. § 1915(e)(2)(B)(ii).

Ohio Court Held That the Promissory Note was a Negotiable Instrument Subject to Relevant Provisions of R.C. Chapter 1303

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The court in deciding Bank of Am., N.A. v. Pasqualone, 2013-Ohio-5795 (Ohio Ct. App., Franklin County, 2013) ultimately decided that the motion to strike moot, thus this court affirmed judgment of the lower court.

This court held that the promissory note was a negotiable instrument subject to relevant provisions of R.C. Chapter 1303 because it contained a promise to pay the lender the amount of $100,000, plus interest, and did not require any other undertakings that would render the note nonnegotiable. Moreover, because Bank of America was the holder of the note it was a person entitled to enforce the note pursuant to R.C. 1303.31(A)(1).

The court noted that based on the authorization, the note became payable to the bank as an identified person and, because the bank was the identified person in possession of the note, it was the holder of the note. Further, as the property owner’s defenses to the mortgage foreclosure did not fit the criteria of a denial, defense, or claim in recoupment under R.C. 1303.36 or R.C. 1303.35, the bank’s right to payment and to enforce the obligation was not subject to the owner’s alleged meritorious defenses.