Maryland's Department of Labor, Licensing and Regulation (DLLR) has obtained for consumers about $246,000 in refunds related to a series of regulatory examinations of mortgage servicers.
Litton Loan Servicing and Saxon Mortgage Services have each refunded approximately $71,000 to a combined total of 160 Maryland consumers, while Bayview Loan Servicing has refunded approximately $104,000 to 40 Maryland consumers. The refunds followed compliance examinations conducted by the DLLR's Office of the Commissioner of Financial Regulation that uncovered previous violations of Maryland law, primarily related to restrictions on the imposition of prepayment penalties.
The refunds relate to violations of prepayment restrictions in effect prior to the 2008 Maryland mortgage and foreclosure regulatory reforms, Bloom Raskin said. In 2008, Gov. Martin O’Malley signed into law a prohibition against prepayment penalties in connection with residential mortgage loans.
Maryland is one of the few states that maintain licensing and examination authority over independent mortgage servicers. The state does not have authority over those servicers owned by federally chartered banks and thrifts.
Showing posts with label Out of State. Show all posts
Showing posts with label Out of State. Show all posts
Monday, July 19, 2010
Wednesday, June 23, 2010
In Re Angelo Divittorio 05-20854 Eastern Div MA
The U.S. Bankruptcy Court for the District of Massachusetts, Eastern Division, recently held that: (1) a debtor failed to state a claim under the Massachusetts Consumer Credit Cost Disclosure Act (“CCCDA”) based on an alleged inaccuracy in the disclosure of an interest rate reduction feature contingent upon future timely payments; and (2) the debtor waived his CCCDA claims against a mortgage lender and its successors and assigns by signing and subsequently defaulting on a loan modification agreement which included specific waiver language.
After a debtor filed his Chapter 13 bankruptcy petition, the mortgage loan on his primary residence became the subject of a significant amount of litigation. The debtor first opposed the loan servicer’s motion for relief from stay, and the parties eventually entered a modification agreement as to the loan. The modification agreement included a release provision pursuant to which the debtor agreed that by executing the modification he "irrevocably waived and relinquished" any claims of any kind related to the loan documents in existence at the time of the modification, whether known or not known, against all prior and subsequent parties or predecessors in interest to both the loan servicer and the loan investor.
The debtor redefaulted by falling behind on his modified payments. He then sent a notice of rescission and shortly thereafter filed the instant adversary action against the loan investor for rescission of the mortgage loan under the CCCDA. The debtor sought rescission of the loan in part on the grounds that the APR disclosure provided at the closing of the loan was inaccurate because it was calculated presuming the borrower would eventually qualify for an interest rate reduction feature that would kick in only after the debtor made twenty-two timely payments, that this presumption was not clearly and conspicuously disclosed, and that the presumption was not statistically likely to come about. The bankruptcy court granted the investor’s motion to dismiss the adversary claim. The debtor appealed and the district court remanded the matter back to the bankruptcy court for reconsideration.
On remand, the investor filed a motion for summary judgment to be consolidated with its prior motion to dismiss. The investor argued in its summary judgment motion that (1) the debtor should be judicially estopped from asserting any loan origination claims because he failed to assert those claims earlier in his bankruptcy schedules; and (2) that the debtor waived his claims against the investor through the release provision of the modification agreement. This opinion followed.
The bankruptcy court first addressed the motion to dismiss, finding that the FRB's Official Staff Commentary to Regulation Z is silent as to whether a lender can factor an assumption of timely payments into an APR calculation at the time of assumption and ultimately holding that the debtor failed to state a claim under the CCCDA because the TIL disclosure was “based upon what the regulations required,” and the debtor was wrongfully attempting to re-characterize a time-barred predatory lending claim as a rescission claim in recoupment under the CCCDA.
The court next looked to the judicial estoppel claim made by the investor in its motion for summary judgment, finding that the investor “failed to satisfy one of the mandatory conditions …of judicial estoppel,” namely, that the party “succeeded in the prior proceeding.” In this matter no relief, such as a discharge, had been granted in the prior proceeding, such that application of judicial estoppel was not appropriate.
The bankruptcy court did, however, rule that the debtor had waived his CCCDA claim through his execution of the loan modification agreement. The bankruptcy court agreed with the investor’s contention that the waiver provision under TILA, 12 C.F.R. § 226.23(e)(1), which provides that a consumer may waive his or her right to rescind if the extension of credit is a bona fide personal financial emergency, applies only to the initial three-day rescission period and does not any extended period arising from the failure to provide material disclosures.
Further, the bankruptcy court found that, contrary to the debtor’s assertions, it is possible to waive the right of rescission after the expiration of the initial rescission period but before the underlying claim is raised. The bankruptcy court reviewed the few cases on this issue and disagreed with those cases that applied a hyper-technical standard with respect to TILA violations, which has been rejected by the First Circuit. The bankruptcy court applied the First Circuit’s “totality of circumstances” approach to determining the validity of waivers as "knowing and voluntary," ultimately finding that in this matter the debtor’s “possession of the loan documents put him on inquiry notice of his purported CCCDA claims.” The bankruptcy court also found that the language in the release at issue referencing claims arising in connection with the “making, closing, administration collection, or the enforcement … of the loan documents,” was clear and conspicuous and should have compelled the debtor, who was notably represented by counsel, to investigate the possibilities of such claims.
After a debtor filed his Chapter 13 bankruptcy petition, the mortgage loan on his primary residence became the subject of a significant amount of litigation. The debtor first opposed the loan servicer’s motion for relief from stay, and the parties eventually entered a modification agreement as to the loan. The modification agreement included a release provision pursuant to which the debtor agreed that by executing the modification he "irrevocably waived and relinquished" any claims of any kind related to the loan documents in existence at the time of the modification, whether known or not known, against all prior and subsequent parties or predecessors in interest to both the loan servicer and the loan investor.
The debtor redefaulted by falling behind on his modified payments. He then sent a notice of rescission and shortly thereafter filed the instant adversary action against the loan investor for rescission of the mortgage loan under the CCCDA. The debtor sought rescission of the loan in part on the grounds that the APR disclosure provided at the closing of the loan was inaccurate because it was calculated presuming the borrower would eventually qualify for an interest rate reduction feature that would kick in only after the debtor made twenty-two timely payments, that this presumption was not clearly and conspicuously disclosed, and that the presumption was not statistically likely to come about. The bankruptcy court granted the investor’s motion to dismiss the adversary claim. The debtor appealed and the district court remanded the matter back to the bankruptcy court for reconsideration.
On remand, the investor filed a motion for summary judgment to be consolidated with its prior motion to dismiss. The investor argued in its summary judgment motion that (1) the debtor should be judicially estopped from asserting any loan origination claims because he failed to assert those claims earlier in his bankruptcy schedules; and (2) that the debtor waived his claims against the investor through the release provision of the modification agreement. This opinion followed.
The bankruptcy court first addressed the motion to dismiss, finding that the FRB's Official Staff Commentary to Regulation Z is silent as to whether a lender can factor an assumption of timely payments into an APR calculation at the time of assumption and ultimately holding that the debtor failed to state a claim under the CCCDA because the TIL disclosure was “based upon what the regulations required,” and the debtor was wrongfully attempting to re-characterize a time-barred predatory lending claim as a rescission claim in recoupment under the CCCDA.
The court next looked to the judicial estoppel claim made by the investor in its motion for summary judgment, finding that the investor “failed to satisfy one of the mandatory conditions …of judicial estoppel,” namely, that the party “succeeded in the prior proceeding.” In this matter no relief, such as a discharge, had been granted in the prior proceeding, such that application of judicial estoppel was not appropriate.
The bankruptcy court did, however, rule that the debtor had waived his CCCDA claim through his execution of the loan modification agreement. The bankruptcy court agreed with the investor’s contention that the waiver provision under TILA, 12 C.F.R. § 226.23(e)(1), which provides that a consumer may waive his or her right to rescind if the extension of credit is a bona fide personal financial emergency, applies only to the initial three-day rescission period and does not any extended period arising from the failure to provide material disclosures.
Further, the bankruptcy court found that, contrary to the debtor’s assertions, it is possible to waive the right of rescission after the expiration of the initial rescission period but before the underlying claim is raised. The bankruptcy court reviewed the few cases on this issue and disagreed with those cases that applied a hyper-technical standard with respect to TILA violations, which has been rejected by the First Circuit. The bankruptcy court applied the First Circuit’s “totality of circumstances” approach to determining the validity of waivers as "knowing and voluntary," ultimately finding that in this matter the debtor’s “possession of the loan documents put him on inquiry notice of his purported CCCDA claims.” The bankruptcy court also found that the language in the release at issue referencing claims arising in connection with the “making, closing, administration collection, or the enforcement … of the loan documents,” was clear and conspicuous and should have compelled the debtor, who was notably represented by counsel, to investigate the possibilities of such claims.
Californa to Legalize Pot- Not Just for Medical Use
Fourteen states now allow the cultivation and use of marijuana for medical reasons. Besides California, they include Michigan, New Jersey and Colorado. Last month, the District of Columbia Council approved a law to allow people with HIV, glaucoma, cancer and other chronic diseases to buy medical marijuana from a small number of dispensaries in the city. Also last month, a group of about 100 medical-marijuana workers in California voted to join the United Food and Commercial Workers Union. The group includes growers and sellers.
http://www.law.com/jsp/law/sfb/lawArticleSFB.jsp?id=1202462917583&src=EMC-Email&et=editorial&bu=Law.com&pt=LAWCOM%20Newswire&cn=NW_20090623&kw=Pot%20Law%20Practices%20Grow%20as%20Medical%20Marijuana%20Debate%20Rages
http://sites.google.com/site/420college/curriculum-1/advanced-seminar
Battles in California over Mortgages
State legislators in California are considering a bill that would redefine the obligations of many defaulting homeowners, the New York Times reported yesterday. The legislation introduced in the winter by the real estate lobby would have largely shielded foreclosed homeowners from debt collectors. However, by the time it passed the state Senate on June 3, the banking lobby had succeeded in scaling it back. Now the bill goes to the state Assembly, where a committee will take it up next week, and bankers intend to continue lobbying. The original legislation said that borrowers who took cash out of their houses would be shielded as long as they used the money for home improvements. In its current form, the proposed law is not quite so forgiving. The bill that passed the California Senate by a lopsided vote of 30 to 4 would protect former homeowners up to the amount of their original loan. Lenders in California rarely chase foreclosed borrowers for deficiency judgments. Pursuing such cases in court can be an arduous process, and few of those in foreclosure have the assets or incomes to make it worthwhile. However, by raising the possibility of a court fight, they can negotiate favorable terms when agreeing to loan modifications and workouts, surrenders of deeds and sales for less than the full amount owed.
See the follow story:
http://www.nytimes.com/2010/06/22/business/22default.html?adxnnl=1&ref=business&src=me&pagewanted=print&adxnnlx=1277305269-YPE5VDn+sC+Au7bXKEZjuQ
See the follow story:
http://www.nytimes.com/2010/06/22/business/22default.html?adxnnl=1&ref=business&src=me&pagewanted=print&adxnnlx=1277305269-YPE5VDn+sC+Au7bXKEZjuQ
Monday, June 21, 2010
Sales setaside in Illinois
The Illinois legislature passed an amendment to its foreclosure statute allowing a borrower to undo a foreclosure sale if the borrower proves s/he applied for a HAMP loan modification, and that the property was nevertheless sold in material violation of the HAMP program guidelines. Illinois Governor Pat Quinn is expected to sign the legislation into law shortly, and the amendments should become effective on January 1, 2011.
Separately, two Illinois counties also are implementing mandatory foreclosure mediation programs.
Foreclosure Mediation Program - Cook County, IL (Chicago area)
The Cook County Mortgage Foreclosure Mediation Program provides free assistance to Cook County homeowners in foreclosure. Although the program officially started in April of 2010, implementation is beginning now.
In order to qualify, the borrowers must: (1) be residents of Cook County, Illinois; (2) have received a foreclosure summons from the Cook County Court; and (3) live in the building in foreclosure – which may be a single-family home, single-family condominium or apartment building with four or fewer units.
The qualified borrowers are directed to call the toll-free help line to schedule a free meeting with a housing counselor. After meeting with a housing counselor, homeowners will have the opportunity to meet with an on-site attorney to discuss the housing counselor’s recommendations and prepare for a court date that will determine whether the foreclosure case can be mediated with the lender.
Program assistance is provided by the Chicago Bar Foundation, Illinois Housing Development Authority, The Chicago Community Trust, The Center for Conflict Resolution, the Chicago Legal Clinic and Chicago Volunteer Legal Services.
Foreclosure Mediation Program - Will County, IL (Joliet area, southwest of Chicago)
Similarly, the Will County mortgage foreclosure mediation program provides free assistance to Will County homeowners in foreclosure. The program was announced on June 7, 2010, and is being set up for implementation now.
Under rules approved by the Illinois Supreme Court and promulgated by the Twelfth Judicial Circuit (Will County), all residential foreclosure actions are automatically scheduled for a mandatory pre-mediation conference within 60 days.
Along with the summons, defendant borrowers will be given a form explaining the mandatory mediation program. The form will state that the case will be evaluated by an outside mediator for possible loan modification or other resolution. It will also state that if modification is not deemed feasible or if the borrower does not want to save the home, then mediation may still be used to assist the parties in discussing a consent foreclosure in which the lender will waive any deficiency against the borrowers. The form also will advise the borrower to bring certain financial information, and will contain a list of local counseling agencies available to assist borrowers in foreclosure. All financial information will be held in confidence by the mediator and not disclosed to any other party without the consent of the borrower.
An independent mediator will determine at the pre-mediation hearing whether the borrower meets initial criteria of having greater monthly income than expenses in order to qualify for a loan workout or modification. If the borrower does not meet the criteria or does not wish to keep the house, the mediator may seek to determine whether the borrower can deed the property to the lender or consent to a judgment waiving any deficiency judgment against the borrower. If the borrower meets initial criteria for a loan modification or wishes to surrender the property in a consent foreclosure or other arrangement, the mediator will scheduled a mediation conference within 30 days.
At the mediation conference, a representative of the lender must appear in person with full settlement authority and participate in good faith in the mediation process. Failure to attend or to participate in good faith will result in sanctions by the court, including possible dismissal of the action. If the borrower fails to appear without excuse, the mediation will be terminated and the matter will be referred back to the trial court. Any agreement will be reduced to writing and signed by the parties and their counsel.
The Circuit Court may retain jurisdiction of the case for a trial period. If the borrower fails to successfully modify the loan, or if no agreement is reached, the foreclosure will resume in the Circuit Court.
The Will County Chief Judge has compiled a list of qualified mediators, who are either retired judges or attorneys with a minimum of five years experience in the mortgage foreclosure field. Any mediator will be prohibited from practice in residential mortgage foreclosure proceedings in the Twelfth Circuit in any capacity, including bidders at the Sheriff’s sales. Mediators will be paid $150 for each file. To finance the program, the Supreme Court has authorized an increase in the filing fees paid by a plaintiff for all foreclosures in the Twelfth Judicial Circuit (Will County) from $276 to $426.
Separately, two Illinois counties also are implementing mandatory foreclosure mediation programs.
Foreclosure Mediation Program - Cook County, IL (Chicago area)
The Cook County Mortgage Foreclosure Mediation Program provides free assistance to Cook County homeowners in foreclosure. Although the program officially started in April of 2010, implementation is beginning now.
In order to qualify, the borrowers must: (1) be residents of Cook County, Illinois; (2) have received a foreclosure summons from the Cook County Court; and (3) live in the building in foreclosure – which may be a single-family home, single-family condominium or apartment building with four or fewer units.
The qualified borrowers are directed to call the toll-free help line to schedule a free meeting with a housing counselor. After meeting with a housing counselor, homeowners will have the opportunity to meet with an on-site attorney to discuss the housing counselor’s recommendations and prepare for a court date that will determine whether the foreclosure case can be mediated with the lender.
Program assistance is provided by the Chicago Bar Foundation, Illinois Housing Development Authority, The Chicago Community Trust, The Center for Conflict Resolution, the Chicago Legal Clinic and Chicago Volunteer Legal Services.
Foreclosure Mediation Program - Will County, IL (Joliet area, southwest of Chicago)
Similarly, the Will County mortgage foreclosure mediation program provides free assistance to Will County homeowners in foreclosure. The program was announced on June 7, 2010, and is being set up for implementation now.
Under rules approved by the Illinois Supreme Court and promulgated by the Twelfth Judicial Circuit (Will County), all residential foreclosure actions are automatically scheduled for a mandatory pre-mediation conference within 60 days.
Along with the summons, defendant borrowers will be given a form explaining the mandatory mediation program. The form will state that the case will be evaluated by an outside mediator for possible loan modification or other resolution. It will also state that if modification is not deemed feasible or if the borrower does not want to save the home, then mediation may still be used to assist the parties in discussing a consent foreclosure in which the lender will waive any deficiency against the borrowers. The form also will advise the borrower to bring certain financial information, and will contain a list of local counseling agencies available to assist borrowers in foreclosure. All financial information will be held in confidence by the mediator and not disclosed to any other party without the consent of the borrower.
An independent mediator will determine at the pre-mediation hearing whether the borrower meets initial criteria of having greater monthly income than expenses in order to qualify for a loan workout or modification. If the borrower does not meet the criteria or does not wish to keep the house, the mediator may seek to determine whether the borrower can deed the property to the lender or consent to a judgment waiving any deficiency judgment against the borrower. If the borrower meets initial criteria for a loan modification or wishes to surrender the property in a consent foreclosure or other arrangement, the mediator will scheduled a mediation conference within 30 days.
At the mediation conference, a representative of the lender must appear in person with full settlement authority and participate in good faith in the mediation process. Failure to attend or to participate in good faith will result in sanctions by the court, including possible dismissal of the action. If the borrower fails to appear without excuse, the mediation will be terminated and the matter will be referred back to the trial court. Any agreement will be reduced to writing and signed by the parties and their counsel.
The Circuit Court may retain jurisdiction of the case for a trial period. If the borrower fails to successfully modify the loan, or if no agreement is reached, the foreclosure will resume in the Circuit Court.
The Will County Chief Judge has compiled a list of qualified mediators, who are either retired judges or attorneys with a minimum of five years experience in the mortgage foreclosure field. Any mediator will be prohibited from practice in residential mortgage foreclosure proceedings in the Twelfth Circuit in any capacity, including bidders at the Sheriff’s sales. Mediators will be paid $150 for each file. To finance the program, the Supreme Court has authorized an increase in the filing fees paid by a plaintiff for all foreclosures in the Twelfth Judicial Circuit (Will County) from $276 to $426.
Thursday, June 3, 2010
Legal Update - Mabry Applellate Decision re California Civil Code 2923.5
The Court of Appeals decision in the Mabry case just came down today. It's a mixed bag for the servicing and trustee industries. On the positive side, the Court of Appeals adopted most of the arguments ALFN asserted in the Amicus Curiae brief we filed for the United Trustee Association and California Mortgage Association. Specifically, the Court of Appeals ruled, in a published decision, that: (1) the 2923.5 Declaration does not have to be signed under penalty of perjury; (2) that the compliance language in the 2923.5 Declaration can simply track the statute itself, i.e., the Dec does not have to identify the specific method by which the servicer complied with 2923.5; (3) the remedy for non-compliance with 2923.5 is postponement only; and (4) completed sales are not invalidated by alleged non-compliance with 2923.5.
As for the rest of the decision, the Court of Appeals held that: (1) there is a private right of action under 2923.5; (2) a tender is not required as a pre-requisite to stating a substantive 2923.5 claim; (3) 2923.5 is not preempted by HOLA; (4) the matter is remanded to the trial court to determine if Aurora complied with 2923.5; and (5) under the facts presented in the Mabry case, it is not appropriate for a class action.
Five potential implications of the decision on the industry?
1. 2923.5 causes of action on completed sales will be moot as the sale is final;
2. 2923.5 allegations in the eviction process will be moot, greatly helping eviction counsel;
3. Trustees should be able to file more Declarations of Non-Monetary Status on 2923.5 cases;
4. Borrowers will file more TROs alleging non-compliance of 2923.5 by the servicer; and
5. Without the private right of action, preemption or tender arguments, Demurrers and Motions to Dismiss will become more difficult to win, meaning more protracting litigation on those issues.
As for the rest of the decision, the Court of Appeals held that: (1) there is a private right of action under 2923.5; (2) a tender is not required as a pre-requisite to stating a substantive 2923.5 claim; (3) 2923.5 is not preempted by HOLA; (4) the matter is remanded to the trial court to determine if Aurora complied with 2923.5; and (5) under the facts presented in the Mabry case, it is not appropriate for a class action.
Five potential implications of the decision on the industry?
1. 2923.5 causes of action on completed sales will be moot as the sale is final;
2. 2923.5 allegations in the eviction process will be moot, greatly helping eviction counsel;
3. Trustees should be able to file more Declarations of Non-Monetary Status on 2923.5 cases;
4. Borrowers will file more TROs alleging non-compliance of 2923.5 by the servicer; and
5. Without the private right of action, preemption or tender arguments, Demurrers and Motions to Dismiss will become more difficult to win, meaning more protracting litigation on those issues.
Wednesday, May 19, 2010
Case Law Update
In re Strausbough, 2010 WL 1172601 (Bankr. E.D. Mich. Mar. 25, 2010) (Rhodes): A Chapter 13 plan filed on behalf of one spouse can void the lien of a totally unsecured mortgage on property owned by the debtor and his non-filing spouse as tenants by the entireties.
Thursday, May 13, 2010
Interim Attorney Fees Awarded in Consumer Fraud Suit Over Mortgage
In a case of first impression, a New Jersey judge has awarded counsel fees during a pending consumer fraud suit brought by a couple who claim they were scammed by two foreclosure-rescue companies. The judge awarded fees incurred from the outset of the case to the entry of a preliminary injunction. The plaintiffs lawyer calls the fee award "groundbreaking" and says it means that "litigants -- who previously could not afford to initiate a lawsuit -- are now empowered to fight and expose mortgage fraudsters."
for article
http://docs.google.com/fileview?id=0ByahxE3mgBCEOGM0MTljYjUtYzlhMi00OTI0LTkzNWMtNDQwZTQ4MGIzNjBk&hl=en
Wednesday, May 5, 2010
Colorado Expedited Foreclosure Sales
The Bill, known as HB 10-1249, was signed by Governor Bill Ritter, Jr. on April 29, 2010 and will take effect August 1st of this year. Castle, Meinhold & Stawiarski worked diligently with the state on developing the proposed process in order to expedite foreclosure sales on abandoned properties. The new legislation enables the holder of a loan to seek an expedited foreclosure sale (45-65 days from the date the Notice of Election and Demand is recorded) on vacant and abandoned properties. This drastically reduces the current timeframe of 110-125 days.
"This is an important Bill for Colorado," stated Castle. "Shortening the timeframe on the sale of abandoned properties helps to reduce blight, sustains home values and benefits us all. We are honored to have played an active role in the development of this legislation."
For more information about Colorado HB 10-1249, please visit http://www.colorado.gov/.
"This is an important Bill for Colorado," stated Castle. "Shortening the timeframe on the sale of abandoned properties helps to reduce blight, sustains home values and benefits us all. We are honored to have played an active role in the development of this legislation."
For more information about Colorado HB 10-1249, please visit http://www.colorado.gov/.
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