Articles Posted in Banking

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The Fifth Circuit affirmed the district court's grant of summary judgment in favor of Deutsche Bank in an action challenging a foreclosure sale. The court held that the district court did not err in holding that the Rooker-Feldman doctrine did not preclude review of the parties' claims; the court has jurisdiction to hear this appeal; the district court did not err by granting summary judgment to Deutsche Bank because the Vacating Order was void under Texas law and plaintiffs failed to cite any authority demonstrating that the Foreclosure Order was void rather than voidable; and Texas law provided plaintiffs an adequate procedure to challenge the Foreclosure Order and their due process rights were not violated. View "Burciaga v. Deutsche Bank National Trust Co." on Justia Law

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The Fifth Circuit granted movant's motion to stay the FDIC's order assessing a civil penalty against movant pending the resolution of the merits of the petition for review or further order of the court. Movant alleged, among other things, that the FDIC ALJ was an inferior "Officer of the United States" who holds his office in violation of the Appointments Clause. The court held that movant has established a likelihood of success on the merits of his Appointments Clause challenge, that irreparable harm would result absent a stay, and that both the balance of hardships and the public interest favor a stay. View "Burgess v. FDIC" on Justia Law

Posted in: Banking

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Plaintiff filed suit against Wells Fargo, alleging nonconformity with the requirements for foreclosing home equity loans and seeking a permanent injunction and forfeiture. The district court held that plaintiff's suit was time barred and dismissed under Federal Rule of Civil Procedure 12(b)(6). The Texas Supreme Court subsequently issued two opinions, Wood v. HSBC Bank USA, N.A., 505 S.W.3d 542 (Tex. 2016), and Garofolo v. Ocwen Loan Servicing, L.L.C., 497 S.W.3d 474 (Tex. 2016). The Fifth Circuit held that Wood and Garofolo constitute intervening changes in law sufficient to justify post-judgment relief for plaintiff on her claim to preclude foreclosure but not on her claim for forfeiture. Accordingly, the court affirmed in part, reversed in part, and remanded for further proceedings. View "Alexander v. Wells Fargo Bank" on Justia Law

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The Fifth Circuit affirmed the dismissal of plaintiff's claims relating to his mortgage and the foreclosure of his home. The court held that the district court did not err in determining that diversity jurisdiction exists in this case; the district court did not err in dismissing plaintiff's claims for lack of standing to foreclose, quiet title, and breach of contract given that each of those claims was based on the assignment being void; in light of the district court's reasoning and the circumstances of this case, the district court did not abuse its discretion in denying plaintiff leave to replead his promissory estoppel claim; and plaintiff waived his argument that the district court erred in denying his motion to amend. View "Bynane v. The Bank of New York Mellon" on Justia Law

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The lender, Ocwen Loan Servicing, filed suit against the borrower. The borrower asserted affirmative defenses and a counterclaim alleging numerous violations of the Texas Constitution's home equity loan provisions. The district court granted summary judgment for the lender. The court concluded that the district court erred in finding that the borrower's affirmative defenses and counterclaims alleging violations of section 50(a)(6) of the Texas Constitution were barred by a four-year statute of limitations. The court explained that it must follow the Texas Supreme Court's recent holding in Wood v. HSBC Bank USA, N.A. that no statute of limitations applies to a borrower's allegations of violations of section 50(a)(6) of the Texas Constitution in a quiet title action, rather than the court's prior holding in Priester v. JP Morgan Chase Bank, N.A. The court reasoned that, although Wood concerned a borrower's quiet title action, Ocwen has not argued that Wood's statute of limitations holding should not be applied to the borrower's arguments simply because they were asserted as affirmative defenses and as a counterclaim. Accordingly, the court vacated and remanded. View "Ocwen Loan Servicing, LLC v. Berry" on Justia Law

Posted in: Banking

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Twelve individuals in the Houston area who receive Section 8 housing assistance filed suit against AmeriPro and Wells Fargo, alleging discrimination in violation of the Equal Credit Opportunity Act (ECOA), 15 U.S.C. 1691 et seq., on the basis of their receipt of public assistance income. The district court granted defendants' Rule 12(b)(6) motion and dismissed the claims. The court concluded that the Wells Fargo Applicants did not plausibly allege that Wells Fargo discriminated against them on the basis of their Section 8 income or failed to consider their Section 8 income in assessing their creditworthiness; the AmeriPro Inquirers did not plausibly allege that they are "applicants" under the ECOA because they did not actually apply for credit with AmeriPro; and the AmeriPro Applicants did not plausibly allege that Wells Fargo was a "creditor" with respect to them. Therefore, the court affirmed as to these claims. The court concluded that the AmeriPro Applicants did plausibly allege violations of the ECOA by alleging that AmeriPro refused to consider their Section 8 income in assessing their creditworthiness as mortgage applicants, and that they received mortgages on less favorable terms and in lesser amounts than they would have had their Section 8 income been considered. Accordingly, the court reversed as to these claims and remanded for further proceedings. View "Alexander v. Ameripro Funding" on Justia Law

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This appeal involves the Bank, Ocwen, and Power Default's attempt to foreclose on property in Grand Prairie, Texas. On appeal, plaintiff challenged the district court's denial of her motion for remand based on its finding that Power Default, a non-diverse defendant and substitute trustee for the attempted foreclosure, was improperly joined in the proceeding because the foreclosure did not take place. The district court concluded that plaintiff had no wrongful foreclosure claim against Power Default absent an actual foreclosure. In this case, because she would have been unable to assert a cause of action against Power Default in state court, the district court found that joinder of Power Default as a defendant was improper. Therefore, the court agreed with the district court's analysis and conclusion denying plaintiff's motion to remand to state court. The court also agreed with the district court's grant of summary judgment to defendants, concluding that plaintiff may not assert a cause of action for wrongful foreclosure. Accordingly, the court affirmed the judgment. View "Foster v. Deutsche Bank National Trust Co." on Justia Law

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The D’Oench, Duhme doctrine, which originated in the federal common law and is now codified at 12 U.S.C. 1823(e), prevents borrowers from relying on oral agreements they allegedly had with a failed bank to defend against collection efforts of a federal receiver like the FDIC. In this case, plaintiffs filed suit against Heritage for beach of contract and fraudulent inducement after Heritage foreclosed on plaintiffs' properties. While the suit was pending, Heritage was declared insolvent and the FDIC was appointed as receiver. That same day, the FDIC entered into a Purchase and Assumption Agreement with Trustmark, under which it transferred to Trustmark various Heritage assets and liabilities, including plaintiffs' notes and guaranties. The district court subsequently granted the FDIC's motion to dismiss. Trustmark then pleaded 1823(e) as a defense and filed counterclaims against plaintiffs for the amount still owing on the notes. The district court granted Trustmark's motion for summary judgment. The court rejected plaintiff's waiver arguments, concluding that nothing about Trustmark's agreement with the FDIC expressly or impliedly indicates a voluntary or intentional surrender by Trustmark of the section 1823(e) defense it inherited from the FDIC. The court also rejected plaintiffs' assertion that Trustmark waived this defense by raising it in a dilatory manner. Finally, even viewing an executive’s testimony about the purported side agreement in favor of plaintiffs, there is no evidence from which a jury might conclude that all of the conditions necessary to overcome section 1823(e) are present. Accordingly, the court affirmed the judgment. View "C&C Inv. Prop. v. Trustmark Nat'l Bank" on Justia Law

Posted in: Banking

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LSR appealed the district court's grant of summary judgment denying its wrongful-foreclosure claims and award of attorneys' fees to Wells Fargo. The court concluded that Wells Fargo is entitled to summary judgment on the wrongful-foreclosure claim because LSR cannot establish an essential element. Under Texas law, a party alleging wrongful foreclosure must prove a defect in the foreclosure-sale proceedings. In this case, the court concluded that there is no genuine dispute as to whether Wells Fargo mailed notices of intent to accelerate. The court also concluded that the district court did not abuse its discretion in finding that LSR brought its Fair Debt Collections Practices Act (FDCPA), 15 U.S.C. 1692g, claim in bad faith and for the purpose of harassment. Accordingly, the court affirmed the judgment. View "LSR Consulting v. Wells Fargo Bank" on Justia Law

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Plaintiff filed suit against WAF and RMS, alleging breach of a reverse mortgage agreement and fraudulent inducement. Plaintiff primarily argued that the property’s foreclosure could have been avoided if WAF had not issued a Home Equity Conversion Mortgage (a HECM) in violation of the United States Housing and Urban Development (HUD) guidelines. The court held that HUD regulations govern the relationship between the reverse-mortgage lender and HUD as insurer of the loan. HUD regulations do not give the borrower a private cause of action unless the regulations are expressly incorporated into the lender-borrower agreement. The court affirmed the district court's summary judgment dismissal, holding that plaintiff cannot assert a claim against defendants for breach of HUD regulations, there was no breach of contract, and no valid fraudulent inducement claim. View "Johnson v. World Alliance Fin. Corp." on Justia Law