Filed under: Uncategorized
Guy, Hal, Katherine & Rob bring you the following:
–Trade Association Value
–Fraud prevention updates
–CFPB report on FDCPA
–Big K Roundup
Subcribe to the show via iTunes Music Store:http://phobos.apple.com/WebObjects/MZStore.woa/wa/viewPodcast?id=151785964&s=143441
By Patrick Thomas Woodman, Esq.
On January 30, 2012, the Pennsylvania Superior Court issued an opinion in the Vukmam case (259 WDA 2011 Superior Court of Pennsylvania) affirming a trial court Order that vacated a Sheriff Sale based on what the court found was a defective Act 91 Notice to the borrowers. This decision was issued by a three member panel of the Superior Court (not a full bench decision), and on February 13th a Petition for Re-argument was filed. Go here to view a copy of the decision.
To summarize the facts, the lender filed a foreclosure complaint against Ms. Vukmam in October, 2006 based on failure to pay monthly mortgage costs. A consent judgment was entered with the parties also agreeing that as long Ms. Vukmam made regular payments, the lender would not execute on the judgment. The settlement was approved on May 7, 2009.
On April 5, 2010 the lender filed an affidavit of default and then filed a Praecipe for writ of execution the next day. The property was sold back to the lender on August 2, 2010.
The borrower then filed a motion to set aside judgment and Sheriff’s sale, arguing that the lender failed to comply with the notice requirements of Act 91. The Trial Court agreed and set aside the judgment and the Sheriff Sale and dismissed the foreclosure complaint without prejudice.
The lender then appealed the Trial Court’s decision to the Superior Court and argued that the notice that was sent by the lender was the form drafted and promulgated by the PA Housing Finance Agency. All of the parties agreed that the notice at issue did not meet the requirements of the Act as it was amended in 1998.The Trial Court ruled there was no requirement that the borrower be compelled to prove prejudice by the failure to include the proper language.
The Superior Court reiterated prior decisions that held that the notice requirements pertaining to foreclosure proceedings are jurisdictional and, where applicable, will deprive a court of jurisdiction to act if there is a failure to comply with those provisions. The court therefore upheld the Trial Court’s decision, finding that the Trial Court did not commit an error of law or abuse of discretion.
The lender has filed a request for re-argument of the case by a full Superior Court panel. It could be at least another month or more before the Superior Court decides upon the Motion for Re-argument. It is indeed possible that other borrowers and/or their counsel who learn of the decision will seek redress in the courts.
Until there is a full and final end of the appellate process, we can only recommend that our clients be aware of the decision and the potential for litigation regarding Act 91 letters that did not contain the language providing notice to borrowers of the right to meet with the lender within the relevant time period. We do not read the case as a precedent “yet”, as the case is pending for a re-argument.
Pending foreclosures may be subject to litigation based on the decision as it stands now, and it may be practical to place these files on hold until the case is decided by the full Superior Court. We might recommend a similar hold for evictions as well.
As always we welcome the opportunity to discuss this important issue with you.
If you have any questions on this matter, please contact Mr. Patrick Thomas Woodman, Esq. Tom is an associate practicing in the Real Estate Default Group focused on foreclosure and eviction services in the Pittsburgh office of Weltman, Weinberg & Reis Co., LPA. He can be reached at 412.338.7106 or firstname.lastname@example.org.
by Alan C. Hochheiser, Esq.
The United States District Court for the Eastern District of California In Re Frazier has turned the tides on the split decisions in the Eastern District of California pertaining to the ability of a Debtor to strip second mortgages that have no value in a Chapter 13 proceeding after the Debtor has obtained a discharge in a Chapter 7 proceeding. The District Court’s holding becomes another case in the Country where there is split authority whether the Debtor has the ability to strip a lien under these circumstances. The Courts rational is that the ability to strip the lien is not based upon the Debtor’s lack of ability to obtain a discharge in the Chapter 13 due to the prior Chapter 7 discharge, but rather, is based upon the Debtor’s completion of all the requirements in a Chapter 13 case.
As authority continues to be split around the Country, the chances of this case being brought to the Supreme Court seem very plausible. In addition, we believe that we will see an increase in the Chapter 13 filings in the Eastern District of California after the Debtor has already obtained a discharge in a Chapter 7 case. Chapter 20’s will once again be a proactive measure by Debtors in those Bankruptcy Courts.
When faced with a situation where the Debtor is attempting to strip a lien in a Chapter 13 proceeding where the underlying obligation was previously discharged in a Chapter 7, it is crucial that the following steps be taken. Confirm the value on the property by obtaining an appraisal. Verify the outstanding balance on any mortgages ahead of the mortgage to be stripped to ensure that the amounts set forth by the Debtor are truly the amounts owed. Finding $1.00 of equity will allow your mortgage to survive and be paid in full. In addition, it may be time to determine whether the Chapter 13 proceeding was filed in good faith or solely for the purpose of stripping the second mortgage. The status of the first mortgage on the property will play a large role.
Weltman Weinberg and Reis Co., L.P.A. will continue to the monitor the case log throughout the Country as it pertains to the ability to strip a lien after the Debtor has obtained a Chapter 7 discharge. Unfortunately, Chapter 20 proceedings may be alive and kicking once again.
If you have any questions on this matter, please contact Alan C. Hochheiser, Managing Partner of the Bankruptcy Group at Weltman, Weinberg & Reis Co., LPA. Al can be reached at 216.739.5649 and email@example.com.
By Zarksis Daroga, Esq.
This past legislative session, the Indiana House and Senate passed two bills that will affect Indiana foreclosures. The two bills passed both the House and Senate and are before the Governor for his signature. The bills will become law in Indiana once signed by the Governor and will take effect as of July 1, 2012.
Senate Bill 298
The two areas of interest for our purpose are that SB298 shortens the lien period for a mortgage, and allows for a strict foreclosure by a purchaser at sheriff sale, for an omitted lien in the foreclosure action.
The bill removes a provision specifying that a mortgage or vendor’s lien that was created before September 1, 1982, on real estate in Indiana expires 20 years after the last installment of secured debt is due. It provides that if a mortgage or vendor’s lien does not show the due date of the last installment, the mortgage or lien expires 10 years (instead of 20 years under current law) after the date of execution of the mortgage or lien. SB298 provides that if: (1) the record of the mortgage or lien does not show the due date of the last installment; and (2) the execution date is omitted from the mortgage or lien; the mortgage or lien expires 10 years (instead of 20 years under current law) after the mortgage or lien is recorded. Exceptions to these expiration periods are provided if a foreclosure action is brought or maintained not later than the applicable expiration period. Corresponding changes in the provision allows the mortgagee or lienholder to file an affidavit stating when the debt becomes due.
SB298 provides that at any time after a judgment and decree of sale is entered in an action to foreclose a mortgage on an interest in real property in Indiana, an interested person or an omitted party may bring a civil action concerning an omitted party’s interest in the property. Upon the filing of such an action, it provides that the court shall determine the extent of the omitted party’s interest and issue a decree terminating that interest, subject to the right of the omitted party to redeem the property if the omitted party would have had redemption rights under existing law. Factors are set forth that the court must consider in determining the terms of redemption, provides for the amount to be paid for redemption, and the time allowed for payment. SB298 furthermore provides that: (1) the senior lien on which the foreclosure action was based is not extinguished by merger with the title to the property conveyed to a purchaser at the judicial sale until the interest of any omitted party has been terminated; and (2) until an omitted party’s interest is terminated, the purchaser at the judicial sale is the equitable owner of the senior lien. An interested person’s rights under the new provisions may not be denied because of certain acts or omissions by the interested person.
House Bill 1238
HB1238 could very well reduce foreclosure timelines in Indiana by providing an avenue for lenders to file for abandonment of the mortgaged property with the court and move to judgment.
The bill provides a procedure that allows: (1) a creditor in a mortgage; or (2) an enforcement authority with jurisdiction in the location of the mortgaged property; to petition the court having jurisdiction over an existing mortgage foreclosure action to find that the mortgaged property is abandoned. Upon receiving a petition for a determination of abandonment, the bill provides that the court shall issue an order to show cause as to why the property should not be found to be abandoned and to direct the appropriate parties to appear before the court on a date and time specified in the order. A party subject to the order has the right to: (1) present oral or written evidence or objections on the issue of abandonment to the court; and (2) be represented by an attorney when appearing before the court. Certain specified conditions existing with respect to the mortgaged property constitute prima facie evidence that the property is abandoned. For example, windows or entrances to the property are boarded up or closed off, multiple window panes on the mortgaged property are broken, one or more doors on the property are smashed or broken off, or if continuously unlocked, rubbish trash or debris has accumulated on the property. HB1238 also provides that the debtor’s failure to either: (1) present written evidence or objections on the issue of abandonment before the appearance date; or (2) appear before the court on the appearance date; constitutes prima facie evidence that the property is abandoned.
Moving forward it is important that lenders, throughout the foreclosure process, inform their foreclosure counsel if the property is abandoned or not, as soon as that information becomes available.
If you have any questions on this matter, please contact Mr. Zarksis Daroga, Esq. Zarksis practices in the Real Estate Default Group focused on foreclosure services and is located in the Cincinnati office of Weltman, Weinberg & Reis Co., LPA. He can be reached at 513.333.4075 and firstname.lastname@example.org.
Filed under: Uncategorized
By Larry R. Rothenberg, Esq.
It is well-established that creditors bear the burden of proof in foreclosure actions, to establish that they are entitled to enforce the promissory note. Borrowers’ attorneys are routinely challenging the creditors on this issue, and even in uncontested cases, the courts are applying strict scrutiny to the evidence before granting judgment in favor of the creditor.
The original note is an important document that should be safeguarded by the holder. A lost note is not necessarily fatal to the creditor’s claim, but prevailing in that situation is more difficult in cases where the note was lost by a prior holder.
Under UCC §3-301, and §3-309, a creditor is entitled to enforce the note even if it has been lost, if all of the following apply: (1) they were in possession of the note and entitled to enforce it when loss of possession occurred; (2) the loss of possession was not the result of a transfer by them, or a lawful seizure; and (3) they cannot reasonably obtain possession of the note because it was destroyed, its whereabouts cannot be determined, or it is in the wrongful possession of an unknown person or a person that cannot be found or is not amenable to service of process.
With the heightened level of scrutiny being applied by the courts, a simple statement that the note is lost may no longer be sufficient in order for the creditor to prevail. The creditor must establish the three above-mentioned elements, and must also prove the terms of the note. In addition, the court must find that the borrower is adequately protected against loss that might occur by reason of a claim by another person to enforce the note.
This difficulty was illustrated most recently in Beaumont v. Bank of New York Mellon, a Florida Court of Appeals case decided on February 17, 2012, involving a note that was apparently lost prior to the transfer of the loan to the plaintiff. The Court of Appeals reversed the judgment for foreclosure, because the creditor had failed to prove who lost the note, when it was lost, and offered no proof of anyone’s right to enforce the note when it was lost, or evidence of ownership due to the transfer. The court also noted the requirement that the trial judge is also required to address the issue of providing adequate protection to the borrower against loss that might occur by reason of a claim by another person to enforce the note.
In the current environment, loan servicers should seek to enhance their security protocol, in order to avoid losing the note. Entities acquiring a loan where the note was lost by a prior holder must be prepared to establish all of the necessary details regarding the loss of the note, and the terms of the note, in order to ensure that the courts will recognize their entitlement to enforce the note.
It is also important to note that in the event an unscrupulous note holder sells the loan to two different buyers, the buyer in possession of the original note will generally prevail.
For a copy of Beaumont v. Bank of New York Mellon, go here.
If you have any questions on this matter, please contact Mr. Larry R. Rothenberg, Esq. Larry is the partner in charge of WWR’s Real Estate Default Group in the Cleveland office who focuses on complex foreclosures, evictions and title insurance issues. He is the author of the Ohio Jurisdictional Section within the treatise, “The Law of Distressed Real Estate”, and was a contributing author to “Ohio Foreclosures, What You Need To Know Now”, published by The West Group. He can be reached at 216.685.1135 or email@example.com.
If you have any questions regarding a Florida property, please contact Ms. Cheryl Burm, Esq.. Cheryl is the managing attorney of the Ft. Lauderdale, Florida office, practicing in the Real Estate Default Group of WWR. She can be reached at 954.740.5215 and firstname.lastname@example.org.
Filed under: compliance, Regulation Z, Truth in Lending Act | Tags: challenge, compliance, Regulation Z, truth in lending
Things are slow at Anthrax Research Federal Credit Union, so the CEO, Hugo Bostonian, decides to start an indirect lending program. He enters into an agreement with Ray Slick, owner of Crazy Ray’s Used Cars in Anthrax County. Ray agrees that he will write the loans on credit union paper and do all the member identification checks at his dealership (which is on the lot of an old 24 hour photo building). Ray takes pride in being a master of add-ons. That is, he makes money on getting car purchasers to pay more for extra items on cars and other products.
One afternoon, Stanley Sewer, happens into Ray’s dealership and sees a used Buick that really appeals to him. “It’s a classic!” Ray says to Stanley as he sees him admiring the car. “This ’78 Buick was owned by a little old lady here in town who almost never drove it!” Sewer is so taken with the car that Ray soon has him signing loan documents. Ray asks Stanley if he would like to add a special plastic spray-on coating to protect the car against rust. “It’s a must have,” Ray says, “for these terrible Anthrax County winters!” Sewer signs up for the coating and then Ray says: “And here’s some paperwork for some optional Credit Life Insurance, you want to protect your family, don’t you? In case something happens to you?” Sewer, who happens to be single, signs the paperwork for the insurance too. As Sewer putters away in the Buick, Ray sends the loan paperwork to the credit union.
Six months later, Sewer defaults on his payments and the credit union places the account for collection and ultimately sues Stanley. As luck would have it, Sewer knows a lawyer and she files a counterclaim against the credit union and also makes Crazy Ray’s a party to the action. Sewer alleges that the credit union violated Truth-in-Lending because neither the plastic coating nor the credit life insurance is included in the APR on the note.
Does Sewer have a case? Are there any other issues? How would a strong indirect lending agreement help here?