Maryland Federal Court Holds Insured Lender’s Late Notice Barred Title Insurance Claim

The United States District Court for the District of Maryland recently held that an insured lender’s title insurance claim was barred because the insured did not provide notice of the claim to the title insurance company until after the property was sold in a foreclosure sale. See Wells Fargo Bank, N.A., as Trustee for Soundview Home Loan Trust 2007-OPT1, Asset-Backed Certificates, Series 2007-OPT1, 2017 WL 3868693 (D. Md. Sept. 5, 2017). In 1994, the borrowers obtained a loan that was secured by a deed of trust on their home. 

Arizona Court of Appeals Affirms Summary Judgment for Mortgagee Under Replacement Doctrine, but Reverses Application of Equitable Subrogation

In an action regarding lien priority between two lenders, the Court of Appeals of Arizona recently affirmed the trial court’s application of the replacement doctrine and concluded that plaintiff’s deed of trust takes priority over defendant’s deed of trust, but reversed the trial court’s application of the doctrine of equitable subrogation in favor of plaintiff, on the grounds that plaintiff’s predecessor in interest had actual knowledge of defendant’s junior lien but failed to take the proper steps to ensure it was satisfied and released.  See US Bank, N.A. v. JPMorgan Chase Bank, N.A., 398 P.3d 118 (Ariz. Ct. App. 2017).

New Jersey’s Appellate Division Affirms Trial Court’s Decision That Lender Was Entitled to Equitable Subrogation and Spouse Ratified Mortgage

The New Jersey Appellate Division recently affirmed a lower court’s decision that a lender would be equitably subrogated to the position of an earlier mortgage despite the mortgagee’s spouse’s claim that she was unaware of any mortgage, and that the spouse had ratified the mortgage.  See Reibman v. Myers, 164 A.3d 1080 (N.J. Super. Ct. App. Div. 2017).  In the case, plaintiff’s father-in-law purchased a house for plaintiff and her husband in 2001, and plaintiff contributed some of the down payment.

Florida Federal Court Holds Insured’s Bad Faith Claim Is Premature

The United States District Court for the Middle District of Florida recently held that an insured’s bad faith claim must be abated because the insured had not yet prevailed on its underlying breach of contract claim.  See Stewart Title Guar. Co. v. Machado Family Ltd. P’ship No. 1, 2017 WL 3622006 (M.D. Fla. Aug. 23, 2017).  In the case, the insured was the assignee of a title insurance policy and a mortgage on a 1,300-acre property in Central Florida. 

New York Federal Court Denies Defendants’ Motion for Reconsideration or Leave to File Interlocutory Appeal of Court Order Denying Motion to Dismiss FDCPA Claim

The United States District Court for the Southern District of New York recently denied defendants’ motion for reconsideration of the Court’s order denying defendants’ motion to dismiss plaintiff’s claim alleging violations of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §1692 et seq. or, alternatively, their request for certification to file an interlocutory appeal.  See Toohey v. Portfolio Recovery Assocs., LLC, 2017 WL 2271548 (S.D.N.Y. 2017). 

New York Appellate Division Holds REMIC Beneficiaries May Have Breach of Contract Claim Against Trustee for Its Below-Market-Value Purchase of Assets

New York’s First Department Appellate Division recently reversed a lower court’s granting of a motion to dismiss and held that the beneficiaries of a real estate mortgage investment conduit (“REMIC”) trust may bring a breach of contract claim against the trustee when the trustee purchased the assets for a below-market price and then resold them to a third party for profit.  See Cece & Co. v. U.S. Bank Nat. Ass’n, 2017 WL 3253370 (1st Dept. Aug. 1, 2017).  

Eleventh Circuit Affirms Dismissal of RESPA Claim for Failure to Provide Phone Number of Loan Owner

The United States Court of Appeals for the Eleventh Circuit recently affirmed a lower court’s decision granting defendant loan servicer’s motion to dismiss plaintiff’s complaint alleging violations of the Real Estate Settlement Procedures Act, 12 U.S.C. 2601 et seq. (“RESPA”), on the ground that defendant’s alleged misconduct did not violate RESPA.  See Mejia v. Ocwen Loan Servicing, LLC, 2017 WL 3396563 (11th Cir. Aug. 8, 2017).  In the case, plaintiff alleged that defendant violated RESPA and its implementing regulation, 12 C.F.R. 1024 et seq. (“Regulation X”), because defendant failed to properly respond to plaintiff’s written Request for Information (“RFI”). 

Third Circuit Affirms Liability of Debt Collector on Debtor’s TCPA Claim; Reverses Judgment In Favor Of Debt Collector On Debtor’s FDCPA Claim, Finding Bona Fide Error Defense Does Not Apply

In a case stemming from defendant debt collector’s pursuit of $25 in unpaid medical bills, where plaintiff debtor won summary judgment on his Telephone Consumer Protection Act (“TCPA”) claim but lost at trial on his Fair Debt Collection Practices Act (“FDCPA”) claim, the United States Court of Appeals for the Third Circuit recently issued a precedential decision affirming the TCPA claim but reversing and remanding the FDCPA claim.  Daubert v. NRA Group, LLC, 861 F.3d 382 (3d Cir. 2017).

California Appellate Court Affirms Summary Judgment for Title Insurance Company After Insured Conveyed Its Interest in the Property at Issue

The California Court of Appeals recently affirmed a lower court’s decision granting summary judgment to a title insurance company after the insured voluntarily conveyed the property to a third party.  See Fid. Nat’l Title Ins. Co. v. Butler, 2017 WL 2774337 (Cal. Ct. App. June 27, 2017), reh’g denied (July 21, 2017).  In the case, plaintiffs purchased a parcel of property in 1980 and obtained a title insurance policy from defendant title insurance company.  Among other conditions, the policy stated that “[t]he coverage of this policy shall continue in force as of Date of Policy, in favor of an insured so long as such insured retains an estate or interest in the land.” 

The Not So Short “Short Sale”: New Legislation in New Jersey Helps Expedite the Short Sale Process

The New Jersey Legislature recently amended New Jersey’s Fair Foreclosure Act to require loan servicers on residential mortgages to engage in consultations on short sales with prospective buyers, and to respond to short sale offers from buyers within certain periods. See A2060. Under the bill, which will take effect on September 19, 2017, a mortgage loan servicer is required to respond to a good faith offer from a seller, seller’s agent, or authorized third party to purchase the property through a short sale within 60 days of the date of the offer.