New York Court Slams Door on Lender's Revocation of Acceleration of Entire Mortgage Debt by Voluntary Discontinuance—but Leaves Latch Ajar

The State of New York's Appellate Division for the Second Department has now addressed the issue of whether a lender's voluntary discontinuance of a judicial foreclosure action, whether by court order or stipulation of the parties, is sufficient evidence of a lender's intent to revoke the acceleration of the entire mortgage debt. Unfortunately for mortgage lenders, the court determined voluntary discontinuance is not sufficient. More ›

Senate Narrowly Confirms Kathy Kraninger as New CFPB Head

The Senate voted 50-49 along party lines last week to confirm Kathleen "Kathy" Kraninger to a five-year term as the newest director of the Consumer Financial Protection Bureau (CFPB). She will succeed Acting CFPB Director Mick Mulvaney. Prior to her appointment, Kraninger served as an associate director in the Office of Management and Budget. She also previously held posts in the departments of Homeland Security and Transportation. More ›

Illinois Biometric Information Privacy Act Case Has Significant Impact On Consumer Class Actions

On November 20, 2018, the Illinois Supreme Court heard oral arguments regarding the Illinois Biometric Information Privacy Act (BIPA) in Rosenbach v. Six Flags Entertainment Corporation, et al. BIPA governs how entities may collect, use, and retain biometric data, such as fingerprints and retinal scans. Specifically, the Illinois Supreme Court will rule on whether a plaintiff is an "aggrieved party" to state a claim under BIPA without suffering any actual injury. If the Supreme Court rules the way that they indicated at oral argument, then BIPA will become a large consumer issue. More ›

Consumer Plaintiff Avila Sues Using the Safe Harbor Precedent She Established in Avila Decision—and Loses

Following the Second Circuit's 2016 decision in Avila v. Riexinger & Associates (Avila I), consumer plaintiff Annmarie Avila returned to court in Avila v. Reliant (Avila II) to sue for violations of the Fair Debt Collection Practices Act (FDCPA) under the so called "safe-harbor" provision she helped establish in her previous successful appeal. More ›

Another Court Refuses Lost Note Status to a Successor Lender

Last year, we reported on a Massachusetts Land Court decision, which interpreted Uniform Commercial Code section 3-309 to conclude that a mortgagee cannot foreclose in reliance upon a lost note affidavit, because the 1990 version of UCC 3-309 requires the party seeking to enforce the note demonstrate possession prior to its loss. 32 states remain under the 1990 version, and recently the Rhode Island Supreme Court joined decisions that prohibit enforcement of a lost note under this outdated version of the UCC. In SMS Fin. v. Corsetti, SMS Financial sued to enforce default on a note that was lost by a prior transferee. Sovereign Bank had loaned the defendants $1 million in exchange for a promissory note and a mortgage on property located at 385 South Main Street in Providence, Rhode Island. Following default and foreclosure, the defendants issued to Sovereign a new promissory note to repay the $200,000 deficiency on the original loan. Sovereign subsequently assigned its interest in the loan to SMS Financial; but, Sovereign had lost the original note so it delivered to SMS a lost note affidavit and an allonge. SMS filed suit against the defendants to collect on breach of the note, but the Superior Court entered summary judgment in favor of the defendants because SMS could not enforce the lost note. More ›

Debt Collection Industry Achieves Important Federal Court Wins

In a recent client alert, Hinshaw's Consumer Financial Services team recounted a series of notable federal court decisions they secured on behalf of debt collector clients in recent months. These included multiple wins at the Third and Seventh Circuit Court of Appeals, as well federal districts in Florida and Illinois.

The decisions included affirmation of the need to stay within the scope and original intent of the Fair Debt Collection Practices Act (FDCPA), a personal jurisdiction ruling in favor of an officer of a debt collection company, and expiration dates for settlement offers, along with a memorable win via a successful Rule 11 motion that sought attorneys' fees and costs due to bad faith actions by prolific and familiar plaintiff's counsel.

With the kind permission of Hinshaw's clients, the alert describes in detail seven of these decisions, several of which establish important new precedent favorable to the industry.

Read the alert on the Hinshaw website

New York is Split on Whether Notice of Default Letters Trigger the Statute of Limitations

In Milone v. US Bank, N.A., a New York intermediate appellate court held that a letter to a borrower stating that the failure to cure a mortgage loan default "will result in acceleration" does not start the clock on the statute of limitations to foreclose and recover the entire debt. This ruling differs from that of another New York intermediate appellate court, which had ruled otherwise, setting up the possibility of the New York Court of Appeals weighing in on a key issue in New York foreclosure actions. More ›

American Pipe Clarified: Statute of Limitations for Class Actions not tolled by a Prior Motion for Class Certification

In a unanimous decision, the United States Supreme Court held on June 11, 2018 that a pending motion for class certification does not toll the statute of limitations for the filing of a new class action lawsuit by a putative class member. Writing for the majority in China Agritech, Inc. v. Resh, Justice Ruth Bader Ginsburg repeatedly emphasized that the "efficiency and economy of litigation" is not promoted by allowing less than diligent plaintiffs to file a new, but time-barred, class action lawsuit. Clarifying the Court's prior holding in American Pipe & Constr. Co. v. Utah, 414 U.S. 538 (1974), Justice Ginsburg wrote that "[e]ndless tolling is not the result envisioned by American Pipe." More ›

ACA International Continues Setting Precedent Regarding Autodialers: Second and Third Circuits Follow Suit in Adopting a Narrowed Definition

The Second Circuit, in King v. Time Warner Cable, Inc., and the Third Circuit, in Dominguez v. Yahoo!, Inc., relied upon the D.C. Circuit's decision in ACA International v. FCC in limiting the definition of an autodialer under the Telephone Consumer Protection Act. Dominguez found that Yahoo's text message system did not fit the definition of autodialer, while King emphasized that only a device that currently has the ability to perform autodialing functions can qualify as an autodialer system. More ›

Mortgage Holder Allowed to Proceed with Second Foreclosure Action after the First was dismissed with Prejudice

In Federal National Mortgage Association v. Thompson, the Wisconsin Supreme Court permitted a lender to pursue a second judicial foreclosure action after the first case was dismissed with prejudice. In the first foreclosure action, the lower court agreed with borrower Cory Thompson that his lender had failed to present evidence that a notice of intent to accelerate was mailed and that the servicer was in possession of the original note. After an unsuccessful appeal of the dismissal, the lender sent Thompson a new notice of intent to accelerate payment of the note and filed a second foreclosure action when no payments were received in response to the letter. Following trial of the second foreclosure action, the lower court granted judgment in favor of the lender. Thompson appealed, asserting that claim preclusion barred the second action. More ›