Pennsylvania Superior Court Finds Ambiguity in Title Insurance Policy’s Description of the Insured Property Precludes Summary Judgment

In an action arising out of a failed real estate transaction, the Superior Court of Pennsylvania vacated an order from the Court of Common Pleas denying appellant-insured’s motion for partial summary judgment and granting a cross-motion for summary judgment by appellee-title insurance company on appellant’s claims.  See Michael v. Stock, 2017 PA Super 99 (Super. Ct. 2017), reargument denied (June 13, 2017). 

New Jersey Appellate Division Affirms That Refinancing Mortgage Should Be Granted Priority Over Life Estates Under the Principles of Replacement and Modification

In a decision approved for publication on July 10, 2017, New Jersey’s Appellate Division held that if a lender holds a priority lien on a property and replaces it with a new mortgage via a refinancing, that new mortgage is entitled to priority regardless of the lender’s knowledge of other encumbrances so long as the intervening lienors are not materially prejudiced. See Ocwen Loan Servs., LLC v. Quinn, 2016 WL 6156209 (N.J. Super. Ct. App. Div. Oct. 24, 2016), cert. denied, 2017 WL 658798 (N.J. Feb. 13, 2017).

New Jersey Chancery Division Holds That Courts Cannot Appoint Custodial Receivers in Foreclosure Actions of Single-Family Residential Dwellings

In a noteworthy decision that was approved for publication on June 29, 2017, the New Jersey Chancery Division held that the appointment of a custodial receiver in a foreclosure action of a single-family home or condominium would run counter to the purpose of the Fair Foreclosure Act (“FFA”) (N.J.S.A. 2A:50-03 et seq.) and the FFA’s required notices and other procedures providing homeowners with opportunities to cure foreclosure defaults and keep their homes.

Illinois Federal Court Denies Bad Faith Claim Against Title Insurance Company and Holds Exclusion 3(a) May Apply to Bar Breach of Contract Claim

The United States District Court for the Northern District of Illinois recently dismissed an insured lender’s bad faith claim against a title insurance company and held that Exclusion 3(a) of the policy may bar the lender’s breach of contract claim.  See Bank of Am., N.A. v. Chicago Title Ins. Co., 2017 WL 2215012 (N.D. Ill. May 18, 2017). 

New Jersey Appellate Division Affirms Dismissal of Plaintiff’s Fraudulent Transfer Claim Against Title Agent and Title Insurance Company

The Superior Court of New Jersey, Appellate Division, recently affirmed the trial court’s grant of summary judgment dismissing plaintiff’s complaint against multiple defendants, including the title agent and title insurance company, alleging fraudulent transfer of title to realty, holding that “one, who knows a deed transferring her ownership in property has been filed, but declines to repudiate that conduct and also acts to later approve the conduct and benefits from same, has ratified the conduct and loses the right to challenge the forgery.”

Supreme Court Holds That Purchaser of Defaulted Debt Is Not “Debt Collector” Under FDCPA

In a significant decision for banks and the lending industry as a whole, the United States Supreme Court recently clarified that purchasing and collecting defaulted debt does not make an entity a “debt collector” under the Fair Debt Collection Practices Act (“FDCPA”). See Henson v. Santander Consumer USA Inc., 2017 WL 2507342 (U.S. June 12, 2017). In the case, plaintiffs received and later defaulted on auto loans from CitiFinancial Auto. Santander bought the defaulted debt on these loans from CitiFinancial and attempted to collect for itself. 

Florida District Court Dismisses Plaintiff’s Complaint Alleging Violations of RESPA Due To Lack Of Article III Standing In Light Of Plaintiff’s Failure To Allege Actual Damages

The United States District Court, Middle District of Florida, recently granted 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 plaintiff failed to allege any concrete injury.  Chadee v. Ocwen Loan Servicing, LLC, 2017 WL 1050386 (M.D. Fla. 2017). 

New Jersey Appellate Division Holds Foreclosing Lender Who Simply Winterized and Secured a Condominium Is Not a Mortgagee in Possession and Not Responsible for Condominium Association Fees

In a noteworthy decision for New Jersey lenders approved for publication, the New Jersey Appellate Division recently held that a lender who simply winterizes and secures an abandoned property in foreclosure is not deemed a mortgagee in possession subject to condominium association fees. See Woodlands Cmty. Ass’n, Inc. v. Mitchell, 2017 WL 2437036 (N.J. Super. Ct. App. Div. June 6, 2017). In Mitchell, the borrower defaulted on his loan with the lender and abandoned his condominium. The lender commenced a foreclosure action and then winterized the property and changed the locks.

Michigan District Court Dismisses Plaintiff’s Wrongful Foreclosure Action for Failure to State a Claim

The United States District Court for the Eastern District of Michigan recently dismissed plaintiff debtor’s complaint seeking to have the foreclosure and sheriff’s sale set aside, on the grounds that plaintiff failed to state a wrongful foreclosure claim based on only allegations of 12 C.F.R. 1024.41(g) (“Regulation X”) violations, and holding that “to find that Plaintiff has made out a state-law wrongful foreclosure case using only allegations of Regulation X violations would amount to the creation of a hybrid remedy where neither state law nor federal law has provided for one.”