Mealey's Mortgage Lending : Mealey's : Legal News & Analysis

Mealey's Mortgage Lending

April 30, 2024
Judge Reconsiders, Reverses Dismissal Of ECOA, FHA Claims In Reverse Redlining Suit

FLINT, Mich. — Ruling on the plaintiffs’ motion for reconsideration, a federal judge in Michigan reversed the dismissal of Fair Housing Act (FHA) and Equal Credit Opportunity Act (ECOA) claims against lenders and agents in a putative class action alleging reverse redlining. The plaintiffs had argued that the court erred in dismissing the claims without addressing their disparate treatment claim.
April 29, 2024
High Court Won’t Review Whether Bankruptcy Discharge Preempts State Law Claims

WASHINGTON, D.C. — The U.S. Supreme Court on April 29 denied a loan servicer’s request to resolve a circuit split and decide whether the U.S. Bankruptcy Code “preempts state-law claims premised on alleged efforts to collect a debt” in violation of a bankruptcy court’s discharge injunction.
April 29, 2024
Class Counsel Motions Sealed As $185M Settlement Mulled In Mortgage Suits

COLUMBUS, Ohio — A federal magistrate judge in Ohio directed that two motions for appointment of class counsel filed in related suits accusing Wells Fargo Bank N.A. and Wells Fargo and Co. (together, Wells Fargo) of violating state and federal law by engaging in a scheme to place borrowers into a forbearance program during the COVID-19 pandemic be temporarily sealed pending resolution of the motions to seal; the order came just over a week after the plaintiffs in both cases filed a joint motion for preliminary approval of a $185 million settlement.
April 29, 2024
Maryland Panel Vacates Order Denying Stay In Foreclosure Action Against Estate

ANNAPOLIS, Md. — A Maryland appellate court vacated and remanded a lower court order denying a decedent’s estate’s motion to stay or dismiss a foreclosure action filed against it by a trust seeking to foreclose on a residential property owned by the estate, finding that the trust lacks the right to foreclose because it does not have the appropriate revolving credit license.
April 26, 2024
$3.58M Settlement Granted Final Approval In Mortgage Pay-To-Pay Suit

WASHINGTON, D.C. — A federal magistrate judge in the District of Columbia on April 25 granted final approval of a $3,587,254 class settlement to be paid by Nationstar Mortgage LLC, doing business as Mr. Cooper, to end a complaint over the company’s practice of charging mortgagors “convenience fees” to pay their mortgage over the phone.
April 24, 2024
Home Buyer’s FCRA Class Suit Alleging Faulty Credit Reports Settled For $96,000

PHOENIX — A federal judge in Arizona largely granted final approval of $96,000 class settlement agreement in a lawsuit by a home buyer accusing a credit reporting company of failing to ensure that it was providing accurate credit reports after it reported him and others as “deceased,” opining that each of the 67 class members, down from the original estimate of 91, is entitled to receive the maximum statutory amount of $1,000 but that the $24,000 remaining that the lead plaintiff sought to distribute to the class members as “additional compensatory damages” will instead go to the parties’ cy pres recipient as there was no proof of additional actual damages or an agreement for punitive damages.
April 23, 2024
Homeowner Appeals Judgment For Bank In Suit Over Improperly Discharged Mortgage

BOSTON — A homeowner on April 22 appealed to the First Circuit U.S. Court of Appeals a judgment issued in favor of a bank in the bank’s Massachusetts federal court action seeking to strike the discharge of a mortgage granted to it by the homeowners.
April 18, 2024
North Carolina High Court Affirms HAMP Claims Are Time-Barred

RALEIGH, N.C. — Homeowners were on notice of their lenders’ allegedly fraudulent scheme to delay or deny loan modifications through repeated difficulties in securing a loan modification from Bank of America under the Home Affordable Modification Program (HAMP) and when the process resulted in their homes being foreclosed upon, a divided North Carolina Supreme Court said in finding the claims time-barred.
April 15, 2024
Alabama High Court Finds Mortgagee Necessary Party In Foreclosure, Ejection Action

MONTGOMERY, Ala. — Finding that a mortgagee that sold a property at a foreclosure sale was a necessary and indispensable party to the subsequent buyer’s ejection action against the mortgagor, the Alabama Supreme Court on April 12 reversed a trial court’s ruling that the foreclosure sale was void and remanded for further proceedings.
April 12, 2024
Borrowers File RICO, Conspiracy Class Action Against Wholesale Mortgage Lender

DETROIT — Four homeowners allege in a class action filed in a federal court in Michigan that the nation’s largest wholesale mortgage broker, its CEO and several affiliated companies have participated in a “deliberate scheme, in coordination with a host of corrupted mortgage brokers, to cheat hundreds of thousands of borrowers out of billions of dollars in excess fees and costs that they paid to finance their homes.”
April 12, 2024
Nevada High Court Affirms Preliminary Injunction Denial In Quiet Title Case

LAS VEGAS — A Nevada trial court properly denied property owners’ request for a preliminary injunction in their quiet title action as the owners incorrectly premised their claim on Nevada Revised Statutes Section 106.240 since a 2012 judicial foreclosure action that was initiated and then dismissed by U.S. Bank National Association did not trigger Section 106.240’s 10-year time frame, the Nevada Supreme Court ruled.
April 10, 2024
Judge Bars Octogenarian’s Counsel For Conduct Violations Related To Foreclosure

ATLANTA — A Georgia federal bankruptcy judge prohibited an attorney and his firm from filing any new bankruptcy cases in that court for 12 months, making the prohibition permanent as to any bankruptcy cases paid for by third parties, finding the sanction appropriate for repeated professional conduct violations as in the instant case where the attorney filed a Chapter 13 petition on behalf of an 80-year old man to stop foreclosure of the man’s home but instead accepted fees from the prospective home purchaser.
April 10, 2024
Briefing Wraps In Petition Involving Bankruptcy’s Power Over State Law Claims

WASHINGTON, D.C. — The existence of a circuit split is undeniable in a case questioning whether state law claims are preempted based on a bankruptcy discharge, a lender says in an April 9 reply brief urging the U.S. Supreme Court to accept review and reject arguments that state law claims based on post-discharge conduct escape preemption.
April 08, 2024
State Consumer Protection Claim Against Mortgage Subservicer Survives Dismissal

NORFOLK, Va. — A couple may proceed with a fraud-based claim under the West Virginia Consumer Credit and Protection Act (WVCCPA) in a putative class complaint accusing a mortgage subservicer of overcharging interest by incorrectly applying prepayments as that state law provides “‘an avenue of relief’” based on violations of Federal National Mortgage Association (Fannie Mae) servicing guidelines, a federal judge in Virginia ruled partially denying the subservicer’s motion to dismiss.
April 08, 2024
Homeowners, Lender Settle Appraisal Bias Case; Claims Against Appraiser Continue

BALTIMORE — Homeowners have reached a settlement with a mortgage lender in a suit in a federal court in Maryland alleging that the lender and a property appraiser violated several provisions of the Fair Housing Act (FHA) and the Equal Credit Opportunity Act (ECOA) by undervaluing their home based on their race and by denying a mortgage refinancing application based on that appraisal for an undisclosed amount and a number of policy changes.
April 05, 2024
6th Circuit: Original Mortgagee Had Good Cause For Refusing To Release Lien

CINCINNATI — A Sixth Circuit U.S. Court of Appeals panel has affirmed a trial court’s summary judgment ruling for the once-primary mortgagee that refused to release the lien on a home even though the mortgage was satisfied, finding that good cause existed for the refusal as the mortgagors failed to follow the necessary steps to resolve the issue.
April 02, 2024
Washington Panel Affirms Denial Of Servicer’s Motion To Vacate Quiet Title Order

SEATTLE — On remand from the Washington Supreme Court, a state appellate panel on April 1 again affirmed a trial court’s order quieting title on a property, finding that the high court’s ruling in Copper Creek (Marysville) Homeowners Ass’n v. Kurtz is not a change in law warranting relief.
April 02, 2024
Antitrust Counterclaims Against Wholesale Mortgage Lender Dismissed In Contract Suit

DETROIT — Adopting a Florida federal magistrate judge’s recommendation in The Okavage Group LLC, et al. v. United Wholesale Mortgage LLC, et al. that all claims in a putative class action antitrust complaint against a wholesale mortgage lender should be dismissed, a federal judge in Michigan has dismissed similar counterclaims against the same wholesale mortgage lender related to the same “ultimatum.”
April 01, 2024
Judge Dismisses RESPA Case After Mortgage Servicer, Borrowers Reach Settlement

FORT MYERS, Fla. — A federal judge in Florida on April 1 dismissed without prejudice borrowers’ suit claiming that their mortgage servicer violated the Real Estate Settlement Procedures Act (RESPA) by failing to timely pay their flood insurance premiums, resulting in uncovered Hurricane Ian damage to their home after the parties notified the court that they had reached a settlement.
March 28, 2024
Dismissal Motion In Reverse-Mortgage Fee Class Action Denied Without Prejudice

CENTRAL ISLIP, N.Y. — A federal judge in New York on March 27 sustained objections to a magistrate judge’s recommendation that the court should deny the dismissal motion of one of the defendants in a putative class case over fees and other charges for reverse mortgages based on the defendant’s alleged failure to comply with local rules and a prior order, but the judge adopted the recommendation to deny the motion without prejudice to renewal pending the determination of several issues in a related action.
March 28, 2024
Judge: Mortgage Loan Provider’s Loss Arose From Uncovered Disciplinary Proceeding

CHICAGO — A federal judge in Illinois granted an insurer’s motion to dismiss with prejudice a mortgage loan provider insured’s first amended complaint seeking coverage under a professional liability mortgagee's errors and omissions policy for its $1,275,000 payment arising from an investigation brought by Illinois Department of Financial and Professional Regulation (IDFPR), finding that there is no coverage because the insured’s losses both arose from an uncovered disciplinary proceeding and were uncovered fines, and a policy exclusion bars coverage.
March 26, 2024
Judge Grants Preliminary Approval To Settlement For Lender’s ‘Junk Fees’

SACRAMENTO, Calif. — A California federal judge granted a motion for preliminary approval of a settlement under which Ocwen Financial Corp. and Ocwen Loan Servicing LLC (together, Ocwen) will pay an estimated $53 million to resolve a mortgagor’s class action claims against it for charging “hidden junk fees” in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO) and California’s unfair competition law (UCL).
March 22, 2024
Judge: Identity Theft Victim’s Claims Against Lenders Survive Dismissal Bids

RICHMOND, Va. — Allegations that a woman battling identify theft spent money and suffered emotional distress as a result of lenders’ incorrect reports to credit reporting agencies despite being informed of the situation create standing, a federal judge in Virginia said in denying a motion to dismiss.
March 21, 2024
Mortgage Servicer Denied Judgment In RESPA Action Over Insurance Premiums

FORT MYERS, Fla. — A federal judge in Florida on March 20 denied a mortgage servicer’s motion for judgment on the pleadings in a suit alleging that it violated the Real Estate Settlement Procedures Act (RESPA) by failing to timely pay borrowers’ flood insurance premiums, resulting in uncovered Hurricane Ian damage to their home, rejecting the servicer’s argument that RESPA does not apply because the home is not the borrowers’ primary dwelling.
March 21, 2024
Judge Dismisses Foreclosure Action After Lender’s Voluntary Dismissal, Orders Service

CENTRAL ISLIP, N.Y. — Noting that a lender failed to serve its notice of voluntary dismissal on the borrower defendant who had never appeared in the action, a federal judge in New York in a March 21 docket-only order dismissed the case and ordered the lender to serve a copy of the notice and her order to the defendant by March 25.