According to the Eleventh Circuit, a municipalities’ lawsuit alleging lost tax revenue and increased costs for services case proceed against several large lenders. In City of Miami v. Wells Fargo & Co., 2019 WL 1966943 (11th Cir. 2019), Miami alleged that several large banks violated the Fair Housing Act by engaging in predatory lending that targeted racial minorities. These practices allegedly led to a higher rate of home foreclosures, which directly caused lost tax revenue and increased costs for services.

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In September 2018, the Alabama Supreme Court issued an opinion in GHB Constr. and Dev. Co., Inc. v. West Alabama Bank and Trust, No. 1170484, that caused considerable concern for Alabama lenders. The Court held that future-advance mortgages do not come into existence until funds are actually advanced regardless of when the mortgage was recorded. Last Friday, the Alabama Supreme Court reversed its September 2018 opinion and held that the priority of a future-advance mortgage is based on the date of recording, not when the lender advances funds. A link to the March 2019 decision can be located here. This decision should ease the uncertainty created by the Court’s September 2018 decision.

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The Alabama Civil Court of Appeals recently issued a decision, International Management Group, Inc. v. Bryant Bank, No. 2170744, which, among other things, limits the potential for summary judgment in fraudulent transfer cases, especially where actual fraud must be proven.

In this case, Bryant Bank sued International Management Group (“IMG”) following its alleged insolvency, seeking to void a series of insider transfers of mortgages securing promissory notes to Bryant Bank. IMG’s principal, Michael Carter had personally guaranteed the promissory notes prior to filing personal bankruptcy. Ultimately, IMG and Mr. Carter defaulted on the promissory notes, and Bryant Bank obtained a default judgment against both IMG and Mr. Carter. Prior to the default judgment, however, Mr. Carter, through a series of insider transactions, transferred the mortgages to his parents, who subsequently passed away. Mr. Carter, as executor of his mother’s estate, then transferred the mortgages to himself following his bankruptcy. Bryant Bank claimed that IMG’s first transfer to another Carter-controlled company in 2010 was without any consideration and rendered IMG insolvent, thus rendering the transfers constructively fraudulent and void under the Alabama Uniform Fraudulent Transfer Act (“AUFTA”). If Bryant Bank could not void the transfers, its judgments against IMG and Mr. Carter were likely worthless, as neither party had sufficient assets to satisfy the judgments.  Following discovery, the trial court granted Bryant Bank’s motion for summary judgment and voided the transactions, which had the effect of voiding the transfers without the need for trial and made IMG no longer judgment-proof.


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On October 19, 2018, the Alabama Court of Civil Appeals issued an opinion in Chandler v. Branch Banking & Trust Company (No. 2160999), holding that a joint owner of property at issue in an ejectment action is a necessary and indispensable party, even where the non-party property owner’s interests are closely aligned with a named party.

Practically, this ruling emphasizes the importance of joining all necessary parties to an ejectment action when it is filed. Mortgage servicers should examine all mortgage documents as well as the property’s deed to ensure that all potential parties with rights in the property subject to the mortgage are added to the action prior to filing. This case in particular shows that even though the named defendant was the only party reflected on the mortgage, the deed would have revealed that his wife was a joint owner with rights in the property.


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In Patel, et al v. Specialized Loan Servicing LLC, et al, No. 16-12100 (11th Cir. 2018), the Eleventh Circuit held that claims against a loan servicer for “artificially inflated” force-placed insurance premiums were barred by the filed rate doctrine. In Patel, the plaintiff alleged that loan servicers and insurance companies breached implied covenants of good faith and fair dealing, as well as various deceptive and unfair trade practice statutes, by purchasing force-placed insurance for the plaintiffs’ mortgaged properties. Plaintiffs alleged that the premiums were “artificially inflated”, “unreasonably high”, and that they reflected the “costs of kickbacks” to the loan servicers. The Court affirmed the Southern District of Florida’s dismissal of the plaintiff’s complaint for failure to state a claim, finding that the allegations in the complaint were “textbook examples of the sort of claims” barred by the filed-rate doctrine.

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Earlier this month, Florida’s Supreme Court clarified that the 60-day period to claim surplus funds from judicial foreclosure sales begins from the county clerk’s issuance of the certificate of disbursements, not from when the property is actually sold at auction.  In Bank of New York Mellon v. Glenville, Docket No. SC17-954, 2018 WL 4327881 (Fla. Sept. 6, 2018), the Court considered whether a bank had timely filed its claim for surplus funds when it filed the claim 62 days after the public auction, but only 35 days after the clerk issued the certificate of disbursements.  In taking up the case, the Court set out to resolve a conflict between Florida’s Second and Fourth District Courts of Appeal over whether the 60-day period began to run upon the public auction of the property, the clerk’s issuance of the certificate of title, or another event.

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Last month, the Alabama Supreme Court bypassed the statute of frauds and held that, even though one party had clear record title, the dispute over ownership should go to trial. While the opinion purported to apply “well-settled” Alabama law, it is a strong reminder that the statute of frauds does not apply to all real estate transactions and that record title holders may have to defend against an oral contract in certain situations.

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If a mortgage servicer fails to comply with its obligations under the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. 2601, et seq., or its implementing regulations, a borrower may recover “any actual damages . . . as a result of the failure.” 12 U.S.C. 2605(f)(1)(A). Thus, to prevail on a RESPA claim, a borrower must show “actual damages” sustained as a result of the failure to comply. What constitutes “actual damages” has been the subject of a litany of recent decisions involving RESPA claims. In Baez v. Specialized Loan Servicing, LLC, 2017 WL 4220292 (Sept. 22, 2017), the Eleventh Circuit provided more clarity on the scope of “actual damages” under the statute.

Jaki Baez took out a mortgage loan in 2005, and Specialized Loan Servicing (“SLS”) took over the servicing of the loan a few years later. In January 2015, Baez stopped paying her mortgage to see if she could qualify for a loan modification agreement. She retained a law firm to both help with any ensuing foreclosure and to achieve a loan modification. She agreed to pay the firm a flat fee of $400 per month in connection with those efforts. In September 2015, Baez, through her attorney, sent a written request for information under 12 C.F.R. 1024.36(a) (part of RESPA’s implementing Regulation X, 12 C.F.R. part 1024) to SLS, in which she asked for information about her mortgage loan. SLS acknowledged the letter and later submitted a packet of information in response, but Baez claimed that the packet was deficient because it did not contain a file with SLS’s communications with her. Soon after receiving SLS’s purportedly deficient response, Baez filed suit under RESPA. The trial court granted summary judgment in favor of SLS, finding that Baez failed to show that she had been injured by SLS’s response to her request for information. Baez appealed, and the Eleventh Circuit affirmed.


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In a recent surprising loss for mortgage holders, the Alabama Supreme Court held that a failure to strictly comply with the exact terms of the mortgage when conducting a foreclosure sale can result in the sale failing. Thus, lenders should be especially careful to conduct foreclosure proceedings exactly as required by their mortgages or risk expending substantial resources toward only to have this work later undone by a court.

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