The statute providing borrowers with a right to cure mortgage payment defaults before acceleration and foreclosure can occur imposes no deadline on completion of foreclosure proceedings once commenced, according to two very recent Massachusetts decisions.
The United States Court of Appeals for the 5th Circuit has held that recording Mortgage Electronic Registration Systems, Inc. ("MERS") as the holder or beneficiary of a mortgage comports with Texas law. Harris County Texas, et al. v. MERSCORP Inc., et al., No. 14-10392, 2015 WL 3937927 (5th Cir. June 26, 2015). This adds to the Court's prior holding in Welborn v. Bank of N.Y. Mellon Corp., 557 Fed.Appx. 383 (5th Cir. 2014), treated in this blog on April 11, 2014, that certain government entities could not recover from MERS on the basis of federal RICO statutes.
While the American economy has shown tentative signs of stabilization and recovery, the nation's courts continue to grapple with legal questions that emanate from the Great Recession and the bursting of the so-called "housing bubble." In one notable development, the United States Supreme Court has decided an important question regarding the treatment of home mortgages in Chapter 7 bankruptcy cases (i.e., cases in which the bankruptcy trustee gathers and sells the debtor's non-exempt assets and uses the proceeds of such assets to pay creditors in accordance with the Bankruptcy Code.)
The United States District Court for the Middle District of Florida has issued an opinion collecting 11th Circuit precedent and reiterating that foreclosure or other enforcement of a security interest, without more, is not "collection of any debt" under the Fair Debt Collection Practices Act, 15 U.S.C. § 1692-1692p ("FDCPA"). While an enforcement of a security interest comingled with an attempt to collect payment on the underlying debt may fall under the FDCPA, mere foreclosure or other security enforcement does not. Gillis v. Deutsche Bank Trust Company Americas, 2015 WL 1345309 (M.D. Fla., Mar. 23, 2015).
Where a mortgage states the term of its underlying debt but includes no separate statement of its own term, the two are one-and-the-same, the Massachusetts Supreme Judicial Court (the "SJC") has decided in an opinion interpreting and upholding the so-called "obsolete mortgage" statute.
The Massachusetts Supreme Judicial Court ("SJC") has held that the provisions of the "Obsolete Mortgage" statute, Mass. Gen. L. c. 260, § 33, as amended in 2006, comport with the Massachusetts and United States Constitutions. Deutsche Bank National Trust Co. v. Fitchburg Capital, LLC, et al., No. SJC-11756, 2015 WL 1649160 (Mass. Apr. 15, 2015). Further, the SJC held that for purposes of the statute, a reference to the maturity date of the underlying debt secured by the mortgage is sufficient to state the "term of maturity date of the mortgage," and thereby trigger a loss of enforceability of the mortgage. Id.
The Massachusetts Appeals Court has reaffirmed its holding in Sullivan v. Kondaur Capital Corp., 85 Mass.App.Ct. 202 (2014), that mortgagors have standing only to challenge assignments of their mortgages that are void, not merely voidable, and that the Mortgage Electronic Registration Systems, Inc. ("MERS") system of mortgage assignments comports with Massachusetts law. The Court in Shea v. Federal National Mortgage Association, et al., No. 13-P-1630, slip op. (Mass. App. Ct. Feb. 18, 2015), further reaffirmed that a mortgagee need not ever hold the note secured by the mortgage, and that Massachusetts law does not require authorization from the noteholder for a mortgagee to assign the mortgage to another party.
While the American economy has shown tentative signs of stabilization and recovery, the nation's courts continue to grapple with legal questions that emanate from the Great Recession and the bursting of the so-called "housing bubble." In one notable development, the United States Supreme Court has recently agreed to decide an important question regarding the treatment of home mortgages in Chapter 7 bankruptcy cases (i.e., cases in which the bankruptcy trustee gathers and sells the debtor's non-exempt assets and uses the proceeds of such assets to pay creditors in accordance with the Bankruptcy Code.) Having granted certiorari in two substantially similar cases, Bank of America, N.A. v. Caulkett and Bank of America, N.A. v. Toledo-Cardona, the Supreme Court will decide whether section 506(d) of the Bankruptcy Code permits a Chapter 7 debtor to void a junior mortgage lien in its entirety when the outstanding debt owed to a senior lien holder exceeds the current value of the home in question. In more colloquial terms, the Supreme Court will determine whether a debtor may "strip off" a junior mortgage lien that is "under water."
The 7th U.S. Circuit Court of Appeals has held that borrowers are not assured of conditions that would allow them to rescind a home mortgage loan pursuant to the federal Truth in Lending Act ("TILA"), 15 U.S.C. 1601 et seq., and that a court can condition rescission of the loan on the borrowers' tender of the full principal balance of the loan. The Court in Iroanyah v. Bank of America, et al., 2014 WL 2198562 (7th Cir. May 28, 2014) affirmed the determination of the district court that conditioned the borrowers' rescission, and the attendant release of the banks' security interests in the home, on the borrowers' tender of the remaining principal balances within 90-days.
The United States Court of Appeals for the 5th Circuit has held that government land recording offices cannot state a claim under the federal RICO statutes for loss of revenue due to fewer filing fee revenues or for allegedly inaccurate records. Welborn v. Bank of N.Y. Mellon Corp., No. 13-30103, 2014 WL 843262 (5th Cir. March 5, 2014).