Maine Supreme Court Revisits Reverses its Controversial 2017 One-and-Done Foreclosure Decision

A highly contested and controversial legal defense to residential foreclosures in Maine resurfaced earlier this month with the Maine Supreme Judicial Court's decision in Finch v. U.S. Bank, N.A.

Finch renewed the legal question of whether a mortgage lender is barred from pursuing a second judicial foreclosure action after a trial court dismissed the first action on the grounds that the lender's pre-foreclosure notice of right to cure failed to comply with Maine statutory law, specifically Section 6111. More ›

Rhode Island Supreme Court Continues to Strictly Interpret "Clear and Unforgiving" Statutory Language Regarding Court-Approved Redemptions from Tax Sale Proceedings

In Westconnaug Recovery Co., LLC v. U.S. Bank N.A, the Rhode Island Supreme Court has continued to rule against redemption and in favor of strict application of the Rhode Island's Tax Title Act. Specifically, an interested party must assert a statutory right to redemption under § 44-9-29 even if initially contesting the validity of tax title under § 44-9-31 in response to a foreclosure proceeding. More ›

Sixth Circuit Applies Recent SCOTUS Tax-Taking Decision to Affirm an Owner’s Right to Net Tax Lien Foreclosure Proceeds

We previously reported on the U.S. Supreme Court’s decision, Tyler v. Hennepin County, where the court concluded that the State of Minnesota violated a property owner’s constitutional rights by keeping the excess sale proceeds from a tax lien sale. Following Tyler v. Hennepin County, the Sixth Circuit, in Freed v. Thomas, affirmed a lower court’s holding that a Michigan county similarly violated the Fifth Amendment's Takings Clause. Freed owed the County roughly $1,100 in property taxes. The County foreclosed its tax lien and sold Freed’s property at public auction for $42,000 in accordance with Michigan’s General Property Tax Act. The County refused to pay Freed the roughly $40,000 over and above his tax debt. Freed sued the County, claiming that retaining the excess proceeds was an unconstitutional taking in violation of the Fifth Amendment and an excessive fine in violation of the Eighth Amendment. More ›

SCOTUS Finds that Minnesota Tax Lien Statute Violates the Fifth Amendment's Takings Clause

In Tyler v. Hennepin County, a unanimous U.S. Supreme Court concluded that the State of Minnesota violated a property owner's constitutional rights by keeping the excess proceeds from a tax lien sale. Geraldine Tyler owned a condominium in Hennepin County, Minnesota, but when she and her family decided she should move into a senior community in 2010, property taxes went unpaid. By 2015, Tyler owed the county $2,300 in unpaid taxes and $13,000 in accumulated interest and penalties. The county then seized and sold the condo for $40,000, extinguished the debt Tyler owed but retained all excess proceeds totaling $25,000 for its own use. Under Minnesota law, any excess tax sale proceeds could be split between the county, the town, and the school district. More ›

Rhode Island Federal Court Concludes FDCPA Lawsuit is Barred by the Doctrine of Claim-Splitting

In Laccinole v. MRS BPO, LLC, the United States District Court for the District of Rhode Island denied a frequent pro se plaintiff’s multiple lawsuit attempt at pursuing relief against the same company under the Fair Debt Collection Practices Act (FDCPA). Christopher Laccinole filed three separate lawsuits against the same company arising from fourteen different contacts between February 22, 2022 and May 5, 2022, in which Laccinole claimed the company wrongfully sought collection of a debt he did not owe. According to the decision, Laccinole deliberately pursued three separate actions for different FDCPA violations against the same party to circumvent the FDCPA’s cap on damages at $1,000 per defendant. (15 U.S.C. § 1692k(a)(2)(A)) The Court determined that Laccinole was claim-splitting by pursuing three separate lawsuits on additional calls: separate instances of the same course of conduct by one defendant. More ›

First Circuit Expands Strict Compliance Review of a Pre-Foreclosure Notice of Default Beyond Disclosure of a Borrower's Rights

An ever-expanding review of pre-foreclosure notices of default experienced its latest chapter in the First Circuit's recent decision reversing dismissal of suit in Aubee v. Selene. In Aubee, the borrowers challenged the notice of default they received prior to foreclosure on the grounds that the notice inserted additional language that was misleading and deceptive. The Aubees' mortgage included the standard Paragraph 22 notice of default disclosures requiring the mortgage lender to inform a borrower of the right to reinstate after acceleration and the right to bring a court action to assert the non-existence of a default or any other defense to acceleration and sale. The Aubees' notice of default stated: "You have the right to reinstate after acceleration and the right to assert in the foreclosure proceeding the non-existence of a default and/or the right to bring a court action to assert the non-existence of a default or any other defense to acceleration, foreclosure and/or sale of the property." The Rhode Island federal court dismissed the case because the notice of default provided the Aubees with all disclosures mandated under Paragraph 22, but the First Circuit reversed. More ›

In a Win for Mortgage Servicers, Massachusetts Supreme Court Finds Mandatory Notice of Right to Cure in Notice of Default is Not Potentially Deceptive

Massachusetts moved one step closer to resolving an ongoing debate over pre-foreclosure notices of default that started with the First Circuit's decision in Thompson v. JPMorgan Chase Bank back in February of 2019. Initially, the First Circuit concluded that a notice of default, which disclosed that borrowers "could still avoid foreclosure by paying the total past-due amount before a foreclosure sale," was potentially misleading because the mortgage only allowed reinstatement five days before the sale. Chase filed a petition for rehearing, joined by numerous amici, that demanded reconsideration of the First Circuit's decision on grounds that the potentially misleading language was in fact a mandatory disclosure under the Code of Massachusetts Regulations. More ›

Payment Deferral Now an Option for Borrowers in Fannie Mae and Freddie Mac COVID-19 Forbearance Plans

We previously reported on the impact of the CARES Act on federally backed mortgage loans, including the immediate availability of a 180 – 360 day forbearance plan for borrowers impacted by the pandemic. One key feature of this legislation and accompanying guidance publications is that servicers of GSE loans are required to evaluate borrowers for repayment options—including reinstatement, a repayment plan, modification, or some other workout—at the conclusion of the forbearance period. The forbearance plans do not offer loan forgiveness, and borrowers and their servicers are expected to resolve the forbearance amount at the end of the plan. More ›

Congress is Nearing a $2 Trillion Stimulus Deal, Here's What it Means for Loan Servicers

The COVID-19 outbreak has resulted in unprecedented job loss for millions of Americans, creating economic uncertainty and challenges for loan servicers in 2020. Until the outbreak is controlled, missed payments on mortgages and student loans are likely to increase. Already, the U.S. Department of Housing and Urban Development (HUD) and the Federal Housing Finance Agency (FHFA) have issued 60 day moratoriums on foreclosures and evictions, which some states—and most banks and mortgage loan servicers—have adopted. Meanwhile, the Department of Education has announced that all borrowers with federal loans will have their interest rates automatically set at 0% for at least 60 days. Late Wednesday night, the Senate passed H.R. 748, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) after senate leadership reached an agreement with the White House earlier in the week. The legislation now moves to the House of Representatives for what many hope is unanimous consent. While we are still waiting on the House of Representative's approval, we've explored measures within the bill that will immediately impact student and mortgage loan servicers and outlined them below. More ›

FDCPA Claims Dismissed As a Result of Plaintiff's Bad Faith Bankruptcy Conduct

In Vedernikov v. Atl. Credit & Fin., Inc., (Vedernikov I), the U.S. District Court of New Jersey granted the defendant Midland Funding's motion to dismiss, which successfully argued the plaintiff should be estopped from bringing FDCPA claims that he failed to disclose during a bankruptcy action from which he had been discharged. After Midland Funding filed its motion to dismiss in Vedernikov I, the same Court also issued an Order to Show Cause and ultimately dismissed Vedernikov v. Oliphant Financial, LLC (Vedernikov II), another matter brought by the same plaintiff. More ›