Tag Archives: mortgage

Georgia Court Dismisses RESPA, TILA, and HOEPA Claims

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The court in deciding Mitchell v. Deutsche Bank Nat’l Trust Co., 2013 U.S. Dist. (N.D. Ga., 2013) granted the defendant’s motion to dismiss.

Plaintiffs Reginald and Jamela Mitchell claimed that the defendants Deutsche Bank National Trust Co. and MERS violated the Truth-in-Lending Act (“TILA”), the Real Estate Settlement Procedures Act (“RESPA”), the Home Ownership Equity Protection Act (“HOEPA”) and state law by commencing foreclosure proceedings against Plaintiffs’ home.

After consideration of the plaintiff’s assertions, the court concluded that the complaint failed to state a claim upon which relief could be granted.

U.S. Bank Had Standing to Bring Action

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The court in deciding United States Bank Nat’l Ass’n v. McHugh, 2013-Ohio-5473 (Ohio Ct. App., Lucas County, 2013) affirmed the judgment of the Lucas County Court of Common Pleas.

In their sole assignment of error, McHugh argued that US Bank did not have standing to pursue the underlying foreclosure action. US Bank responded by arguing that McHugh’s argument was misplaced in that it failed to address the applicable standard for a motion for relief from judgment under Civ.R. 60(B). Further, US Bank argued that the trial court’s decision was proper in light of McHugh’s failure to meet the standard for Civ.R. 60(B) motions.

Ultimately the court concluded that the trial court did not abuse its discretion in denying their Civ.R. 60(B) motion.

Connecticut Court Denies All Five of Defendant’s Special Defenses to Foreclosure Action

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The court in deciding Bank of Am., N.A. v. Samaha, 2013 Conn. Super. (Conn. Super. Ct., 2013) granted the plaintiff’s motion for summary judgment.

In this action, the plaintiff sought to foreclose a mortgage executed by Joseph Samaha and Denise Samaha in favor of the Webster Bank.

The defendant raised several special defenses to this foreclosure action. First, the defendant asserted that the plaintiff did not have standing to bring this litigation. Second, defendant claimed that as a result of the death of one of the makers of the note, Joseph Samaha, that his estate had an indivisible interest in the subject property and was subject to probate court jurisdiction. Third, the defendant challenged the authority of MERS to assign this mortgage to the plaintiff. Fourth, the defendant alleged that she had tendered payment with regard to the note and she alleged accord and satisfaction. Fifth, the defendant challenged whether or not the note in question was a negotiable instrument.

With regard to the first special defense, the court found that the affidavits supplied by the plaintiff established that they had standing for the purposes of doing this litigation.

In regards to the second defense, the court found that there was simply no authority for this assertion. The third special defense challenged the authority of the MERS to assign the note and mortgage. The court found that there were no facts alleged in the special defense and there was no affidavit from the defendant providing any factual foundation for her assertions.

The court found that the fourth defense was a mere assertion, without any evidence to support it, and thereby contest or create a material issue of fact for a motion of summary judgment is insufficient. Finally, the fifth special defense was deemed to be an assertion of a legal conclusion.

Independent Foreclosure Review: Case Closed?

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The Federal Reserve Board issued its Independent Foreclosure Review. By way of background,

Between April 2011 and April 2012, the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System (“Federal Reserve”), and the Office of Thrift Supervision (OTS) issued formal enforcement actions against 16 mortgage servicing companies to address a pattern of misconduct and negligence related to deficient practices in residential mortgage loan servicing and foreclosure processing identified by examiners during reviews conducted from November 2010 to January 2011. Beginning in January 2013, 15 of the mortgage servicing companies subject to enforcement actions for deficient practices in mortgage loan servicing and foreclosure processing reached agreements with the OCC and the Federal Reserve (collectively, the “regulators”) to provide approximately $3.9 billion in direct cash payments to borrowers and approximately $6.1 billion in other foreclosure prevention assistance, such as loan modifications and the forgiveness of deficiency judgments. For participating servicers, fulfillment of these agreements satisfies the foreclosure file review requirements of the enforcement actions issued by the OCC, the Federal Reserve, and the OTS in 2011 and 2012. (1)

The government’s actions regarding the Independent Foreclosure Review have been its controversial, with some believing that it was completed too hastily. I am less interested in that debate than in FRB’s sense of the the servicing sector going forward.

The report states that “the initial supervisory review of the servicer and holding company action plans has shown that the banking organizations under Consent Orders have implemented significant corrective actions with regard to their mortgage servicing and foreclosure processes, but that some additional actions need to be taken.” (24) Overall, the report reflects an optimism that endemic servicer problems are a thing of the past.

A drumbeat of reports and cases seems to be at odds with that assessment, although there is obviously a significant lag between the occurrence of  problems and the report of them in official sources. As a close observer of the mortgage industry, however, I am not yet convinced that regulators have their hands around the problems in the servicer industry. Careful monitoring remains the order of the day.

Tennessee Court Dismisses Plaintiff’s TCPA Claim

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The court in deciding Amour v. Bank of Am., N.A., 2013 U.S. Dist. (E.D. Tenn., 2013) granted in part and denied in part the defendant’s motion to dismiss

The plaintiffs brought three separate causes of action each of which the defendant moved to dismiss. The plaintiffs’ complaint alleged violations of the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692, et seq., the Tennessee Consumer Protection Act, Tenn. Code Ann. 47-18-101, et seq., and wrongful foreclosure.

The court ultimately decided to allow all but the one of the plaintiffs’ claims. The one cause of action dismissed was the TCPA claim.

Texas Court Rejects Claims Brought on the Grounds of “Show-me-the-Note” and “Split-the-Note” Theories

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The court in deciding Hunt v. Worldwide Mortg. Co., 2013 U.S. Dist. (N.D. Tex., 2013) dismissed the plaintiff’s action in its entirety and specifically granted the defendant’s motion to dismiss.

Plaintiffs asserted claims for fraud (only against MidFirst and its mortgage servicer), wrongful foreclosure, and violations of the Texas Business and Commerce Code and Finance Code. The plaintiffs also sought to quiet title and declaratory relief.

Specifically, the plaintiffs argued variations of the roundly discounted “show me the note” and “split the note” theories, alleging that the defendants did not have the authority to foreclose on the Property because MERS was not holder of the note and thus was not entitled to enforce the deed of trust.

The plaintiffs also contended MidFirst perpetrated a fraud by misrepresenting that it was the holder or beneficiary of the deed of trust entitled to receive mortgage payments on the note, thus collecting on a debt that it had “no legal, equitable or pecuniary interest in.”

Plaintiffs also alleged violations of the Texas Business and Commerce Code, arguing that the defendant had failed to produce the note and that it is very likely that the defendant was not the holder of the note.

Defendants’ moved to dismiss the plaintiffs’ complaint under Federal Rule of Civil Procedure 12(b)(1) for lack of subject-matter jurisdiction, Rule 12(b)(6) for failure to state a claim, this was granted by the court.

Alabama Court Rejects “Split-the-Note” Theory

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The court in deciding Gray v. MERSCORP, Inc., 2013 U.S. Dist. (N.D. Ala., 2013) rejected the split the note theory put forward by Gray.

This matter arose out of a note and mortgage executed in March 2007 by plaintiffs Clayburn Kyle Gray and Carrie Ann Gray, defendant Quicken Loans, Inc., and defendant MERS.

Plaintiffs’ resulting suit primarily consisted of two allegations: (1) that the defendant Quicken wrongfully and deceptively caused the plaintiffs’ entire ten-acre property to be encompassed by the mortgage and (2) that the defendant OneWest, to whom the mortgage was subsequently assigned by defendant MERS, was incapable of foreclosing on the mortgaged property, due to “a separation of the note and mortgage in this cause.”

Defendants filed a motion to dismiss, this was subsequently granted. The court noted that Alabama courts, have roundly rejected the “split the note” theory, thus rendering it ineffective and inapplicable in the present case.