New York Court of Appeals Finds Loan Decelerated When Voluntary Discontinuance of Foreclosure Filed

In a ground-breaking case for lenders, the New York Court of Appeals recently added critical guidance and comfort for lenders as to what constitutes a proper de-acceleration of a loan after the filing of a foreclosure complaint. Namely, the Court of Appeals held that where the acceleration of a loan is triggered by the filing of a foreclosure complaint, a noteholder’s voluntary discontinuance of that action serves to revoke that acceleration unless it is accompanied by an “express, contemporaneous statement to the contrary,” and resets the six-year statute of limitations period for New York foreclosure actions.

New Jersey Appellate Division Finds Actual Knowledge Does Not Bar Equitable Subrogation

In a decision approved for publication, the New Jersey Appellate Division recently found that actual knowledge is not a bar to the doctrine of equitable subrogation for a lender who paid off a prior mortgage but failed to discharge an intervening lien. See New York Mortg. Tr. 2005-3 Mortg.-Backed Notes, U.S. Bank Nat’l Ass’n as Tr. v. Deely, 2021 WL 520063 (N.J. Super. Ct. App. Div. Feb. 12, 2021). 

Third Circuit Finds Rebuttable Presumption of Fraud Under UFTA

The Third Circuit recently vacated a District Court decision and held that a rebuttable presumption of fraud is created under the Uniform Fraudulent Transfer Act (UFTA) when certain badges of fraud are found. MSKP Oak Grove, LLC v. Venuto, 2020 WL 7496512 (3d Cir. Dec. 21, 2020). Appellants were the landlords and creditors of a Florida location of a chain of tanning salons, the parent company of which (Appellee-Debtors, along with the four individual family members who owned all the company’s shares) sold the majority of its assets in 2007.

California Court Holds Agents Not Entitled to Agent Fees on PPP Loans

The United States District Court for the Central District of California recently held that plaintiffs, who assisted clients in obtaining PPP loans from the defendant lenders, did not have a private right of action against the defendants for agent fees.  See Am. Video Duplicating Inc. v. Citigroup Inc., 2020 WL 6712232 (C.D. Cal. Nov. 16, 2020).  In the case, plaintiffs, who included accountants and other consultants, assisted their clients in obtaining PPP loans from defendants. 

U.S. Supreme Court Rules on Property Seized Pre-Bankruptcy Petition

Automatic Stay Not Violated by Retention of Property Seized Before Filing

The United States Supreme Court recently held that 11 U.S.C. § 362(a)(3), a provision of the automatic stay of the U.S. Bankruptcy Code, does not require creditors to take affirmative steps to return property that was seized before the filing of a debtor’s bankruptcy petition. City of Chicago, Illinois v. Fulton, 2021 WL 125106, ____ U.S. ____ (Jan. 14, 2021).