Wednesday, June 13, 2012

Case Law Update

Drummond v. Welsh (In re Welsh), Means test allows debtor to deduct from current monthly income payments on secured debts; debtor need not take into account Social Security income to satisfy § 1325.

Deutsche Bank National Trust Company v. Clarke
January 2012
The trial court entered a directed verdict in favor of the defendant, finding that the Plaintiff's failure to enter the original note and mortgage at trial was fatally defective to its case. During the course of the trial, the court inquired as to the location of the originals. "The original note had been filed with the clerk of the court and was in the court file in preparation for an earlier scheduled summary judgment hearing." The trial court stated it would accept the use of copies after being advised of the originals whereabouts. There was no objection to the use of the copies pursuant to the best evidence rule. Fla. Stat. § 90.953 (2010). The court reserved ruling and did not enter its order until the trial was concluded.
In overturning the trial court's order, the Fourth DCA not only made an evidentiary ruling, it also harmonized a series of cases addressing the need to tender the original documents to the trial court in foreclosure proceedings. Through its opinion, the Fourth DCA has held the tender of the documents to the court at any time during the foreclosure action should be sufficient.

McNeal v. GMAC Mortgage, LLC, Homecomings Financial, LLC
March 11,2012
The holding in McNeal v. GMAC Mortg., LLC (In re McNeal), 2012 U.S. App. LEXIS 9589 (11th Cir May 11, 2012) is based on the concept that Dewsnup - which involved an attempt to cramdown a partially secured mortgage - did not overrule, explicitly, the Folendore decision. Accordingly, it remains good law, and a three judge panel cannot overrule an earlier three judge panel. The undercutting of the Folendore reasoning by the Supreme Court was not sufficient to allow lower courts to disregard binding precedent of the earlier 11th Circuit decision.
At present, stripping mortgages in Chapter 7 is permitted in the 11th Circuit.

Castillo v Deutsche, June 6, 2012
The Florida Third District Court of Appeals ruled on an issue that relates to borrower claims that an investor must establish compliance with its obligations under a Securitized Trust Agreement as a condition of enforcing a note and mortgage held by the trust. The Court ruled that the borrower does not have standing. This ruling is subject to a motion for rehearing and is not final but confident it will stand. 

In the News

Virginia Ruling Holds that Mortgage Lenders Must Hold Face-to-Face Meetings Before Foreclosure in FHA/HUD Loans

HUD Regulation 4155.1 4.C.2.f, which governs FHA mortgages, addresses this common scenario. This regulation states that the contingent liability of the ex-spouse for the future payments due on the mortgage on the home now owned by the other spouse is not be counted if the loan was foreclosed. The regulation reads as follows:
A borrower is generally not eligible for a new FHA-insured mortgage if, during the previous three years his/her previous principal residence or other real property was foreclosed, or he/she gave a deed-in-lieu of foreclosure.
Exception: The lender may grant an exception to the three-year requirement if the foreclosure was the result of documented extenuating circumstances that were beyond the control of the borrower, such as a serious illness or death of a wage earner, and the borrower has re-established good credit since the foreclosure.

Recent changes to the HARP Program removed the maximum percentage amount that a property can have an underwater mortgage. Prior to December 1, 2011, the maximum amount that a property could be underwater was 125% of the loan balance.
This means that if a property is valued at $100,000, the maximum that the mortgage being refinanced would be $125,000 or 125% of $100,000. This would also be referred to as 125% LTV or loan-to-value. is a comprehensive online resource for underwater homeowners who are looking for non-biased information about their options to stay and refinance or consider a short sale.

foreclosure rescue scams overview

The Mortgage Forgiveness Debt Relief Act generally exempts you from being taxed on up to $2 million of mortgage forgiveness on your primary residence through the end of 2012 as long as its due to a decline in the value of your or your financial situation. That means you’ll want to avoid turning it into a vacation or rental property first or waiting until after the act is scheduled to expire at the end of the year.