Articles Posted in Banking

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The Borrowers filed suit against Wells Fargo based on Wells Fargo and its predecessors' alleged miscalculation of interest on the Borrowers' loans. The Ninth Circuit held that the Home Owners' Loan Act (HOLA) did not preempt the Borrowers' "Interest Rate Calculation" breach of contract claim, which arose under Washington law, because a common law breach of contract claim was not the type of law listed in paragraph (b) of 12 C.F.R. 560.2, but comes within paragraph (c) of that regulation and is a law that only incidentally affects the lending operations of federal savings associations. The panel affirmed summary judgment for Wells Fargo on the Borrowers' "Use of Unapproved Indexes" breach of contract claim, and the other claims related to this alleged conduct by the Lenders. In this case, the Lenders gave notice to their primary regulators of their intent to substitute the Indexes used to calculate interest on the Borrowers' loans and the regulators did not object. The panel also affirmed the denial of the Borrowers' motion for discovery sanctions pursuant to Federal Rule of Civil Procedure 37 because the Borrowers failed to show prejudice resulting from this ruling. Finally, the panel vacated the district court's denial of attorneys' fees without prejudice. View "Camidoglio LLC v. Wells Fargo" on Justia Law

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Defendants, debtors who have failed to repay loans held by BB&T, appealed the respective judgments of the district court against them. The Ninth Circuit affirmed the judgment, holding that BB&T had standing to bring the action; issue preclusion did not bar BB&T's arguments; Subsection (1)(c) of Nev. Rev. Stat. 40.459(1)(c), which limited the ability of a third party to profit by purchasing real estate debt at a discount and foreclosing at full price, was preempted by federal law as applied to transferees of the FDIC; the district court did not err in granting summary judgment to BB&T in spite of defendants' affirmative defenses of breach of covenant of good faith and fair dealing, estoppel, modifications, laches, and failure to mitigate damages; the district court did not abuse its discretion by denying defendants' late-filed motion to amend pleadings because defendants' did not demonstrate good cause nor excusable neglect; defendants were not entitled to a jury trial on the fair market value of the property; and BB&T did not violate Nev. Rev. Stat. 163.120(2) concerning notice to trust beneficiaries. View "Branch Banking & Trust Co. v. D.M.S.I., LLC" on Justia Law

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The Ninth Circuit affirmed summary judgment for Freddie Mac in a quiet title action brought by a plaintiff who purchased real property in a homeowners association foreclosure sale. Plaintiff argued that the Nevada superpriority lien provision empowered the association to sell the home to him free of any other liens or interests, priority status aside. The panel held that the district court did not err in concluding that the Federal Foreclosure Bar superseded the Nevada superpriority lien provision. Although the recorded deed of trust here omitted Freddie Mac's name, Freddie Mac's property interest was valid and enforceable under Nevada law. The panel explained that, because Freddie Mac possessed an enforceable property interest and was under the agency's conservatorship at the time of the homeowners association foreclosure sale, the Federal Foreclosure Bar served to protect the deed of trust from extinguishment. Freddie Mac continued to own the deed of trust and the note after the sale to plaintiff. View "Berezovsky v. Bank of America" on Justia Law

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Anaya Law Group, a debt collector, filed suit in state court to collect an unpaid credit card debt, but the complaint overstated both debtor's principal due and the applicable interest rate. Debtor then filed suit against Anaya in federal court for violations of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692 et seq., and of California's Rosenthal Fair Debt Collection Practices Act. The district court granted summary judgment to Anaya. The Ninth Circuit held, however, that the false statements made by Anaya were material because they could have disadvantaged a hypothetical debtor in deciding how to respond to the complaint. Accordingly, the panel vacated summary judgment as to the FDCPA claim and remanded. In regard to the Rosenthal Act claim, the panel affirmed summary judgment on an alternative ground. The panel held that Anaya corrected the misstatements within fifteen days of discovering the violation and thus satisfied the requirements necessary to avail itself of a defense under the Rosenthal Act. View "Afewerki v. Anaya Law Group" on Justia Law

Posted in: Banking, Consumer Law

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The Ninth Circuit filed an amended opinion affirming in part and vacating in part the dismissal of plaintiff's action for failure to state a claim, holding that the trustee of a California deed of trust is a "debt collector" under the Fair Debt Collection Practices Act (FDCPA). Actions taken to facilitate a non-judicial foreclosure, such as sending the notice of default and notice of sale, are not attempts to collect "debt" as that term is defined by the FDCPA; enforcement of a security interest will often involve communications between the forecloser and the consumer; and when these communications are limited to the foreclosure process, they do not transform foreclosure into debt collection. The panel explained that, because the money collected from a trustee's sale is not money owed by a consumer, it is not "debt" as defined by the FDCPA. In this case, the notices at issue did not request payment from plaintiff, but merely informed her that the foreclosure had begun, explained the timeline, and apprised her of her rights. Therefore, the panel held that ReconTrust's activities fell into the category of enforcement of a security interest, rather than general debt collection. View "Vien-Phuong Thi Ho v. ReconTrust" on Justia Law

Posted in: Banking, Consumer Law

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The parties' dispute arose out of transactions originating from the savings and loan crisis during the 1970's and 1980's. Washington Mutual appealed a judgment entered in favor of the Government after a bench trial in a tax refund action. The Ninth Circuit affirmed, holding that Washington Mutual did not meet its burden of establishing a cost basis for its intangible assets. The panel concluded that the district court held Washington Mutual to the correct burden; did not make any clearly erroneous factual findings; permissibly determined that the cumulative fundamental flaws underlying the Grabowski Model rendered it incapable of producing a reliable value for the Missouri Branching Right; and was thus not required to sua sponte assign a value to that Right. Even assuming the Missouri Branching Right could be valued, Washington Mutual nonetheless failed to show reversible error as to the denial of its abandonment deduction. View "Washington Mutual v. United States" on Justia Law

Posted in: Banking, Tax Law

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The SBA guaranteed a loan between a private bank and Michael Bensal's company, BCI. The private bank filed suit against BCI as the borrower and Bensal as a personal guarantor after BCI defaulted on the loan. The private bank recovered a default judgment and assigned that judgment to the SBA. Bensal later received an inheritance from his father's trust that he did not accept and, instead, disclaimed. Bensal's disclaimer of the inheritance legally passed his trust share to his two children and prevented creditors from accessing his trust share under California law. The SBA filed suit seeking to satisfy the default judgment. The court held that the Fair Debt Collection Practices Act (FDCPA), 28 U.S.C. 3301-3308, displaces California's disclaimer law. In this case, the court concluded that Bensal's disclaimer constitutes a transfer of property under the FDCPA, and California disclaimer law did not operate to prevent the SBA from reaching Bensal's trust share. The court also concluded that the portion of the default judgment based on the second loan, which was guaranteed by the SBA, was a debt within the meaning of the FDCPA. Accordingly, the court affirmed the judgment. View "SBA v. Bensal" on Justia Law

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Plaintiffs filed suit against Nationstar and others, asserting claims relating to defendants' servicing of plaintiffs' home loan. Plaintiffs alleged violations of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692-1692p; intentional infliction of emotional distress (IIED); and a violation of the Nevada Deceptive Trade Practices Act (DTPA), Nev. Rev. Stat. 598.0915–598.0925, 598.0934. The district court dismissed the complaint. The court concluded that the district court properly dismissed plaintiffs' claims of violations of sections 1692c(a)(2), 1692d, and 1692e pursuant to Ho v. ReconTrust Co. The court reasoned that Nationstar was not engaged in "debt collection" and thus defendants were not "debt collectors" when interacting with plaintiffs. The court concluded, however, that the district court erred in dismissing plaintiffs' claim under section 1692f(6) on the ground that Nationstar was not collecting a debt. The court explained that, unlike sections 1692c(a)(2), 1692d, and 1692e, the definition of debt collector under section 1692f(6) includes a person enforcing a security interest. In this case, plaintiffs alleged that Nationstar threatened to take non-judicial action to dispossess plaintiffs of their home without a legal ability to do so. The court noted that such conduct is exactly what section 1692f(6) protects borrowers against. Finally, the court concluded that the district court correctly dismissed plaintiffs' claims of IIED and of violation of the DTPA. Accordingly, the court affirmed in part, reversed in part, and remanded. View "Dowers v. Nationstar Mortgage" on Justia Law

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Plaintiff, pro se, filed suit against Chase, alleging claims for, inter alia, breach of contract, breach of implied covenant of good faith and fair dealings, and a violation of California's Unfair Competition Law (UCL), Cal. Bus. & Prof. Code 17200, as well as violation of the Truth in Lending Act (TILA), 15 U.S.C. 1601. Plaintiff's claims stemmed from damages allegedly suffered when she unsuccessfully attempted over a two-year period to modify the loan on her home. The district court granted summary judgment for Chase. The court concluded that the facts plainly demonstrated a viable UCL claim based on the ground that plaintiff was the victim of an unconscionable process. In this case, Chase knew that plaintiff was a 68 year old nurse in serious economic and personal distress, yet it strung her along for two years, kept moving the finish line, accepted her money, and then brushed her aside. During this process, plaintiff made numerous frustrating attempts in person and by other means to seek guidance from Chase, only to be turned away. The court also concluded that the district court erred in failing to acknowledge plaintiff's claim for breach of contract and remanded with instructions to permit plaintiff to amend if necessary and to proceed with her complaint. The court also remanded with instructions to permit plaintiff to amend her complaint to allege a right to rescind under Jesinoski v. Countrywide Home Loans, Inc. View "Oskoui v. J.P. Morgan" on Justia Law

Posted in: Banking, Consumer Law

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After plaintiff began missing loan payments on a house she bought in Long Beach, ReconTrust initiated a non-judicial foreclosure. In this case, the lender was Countrywide, the borrower was plaintiff and the trustee was ReconTrust. Plaintiff subsequently filed suit alleging that ReconTrust violated the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692e(2)(A), by sending her notices that misrepresented the amount of debt she owed. Plaintiff also sought to rescind her mortgage transaction under the Truth in Lending Act (TILA), 15 U.S.C. 1635(a), on the ground that defendants had perpetrated fraud against her. The district court twice dismissed plaintiff's rescission claim without prejudice and then granted ReconTrust's motion to dismiss the FDCPA claims. The court held that actions taken to facilitate a non-judicial foreclosure, such as sending the notice of default and notice of sale, are not attempts to collect “debt” as that term is defined by the FDCPA; the court's holding affirms Hulse v. Ocwen Federal Bank; the court acknowledged that the Fourth and Sixth Circuit declined to follow Hulse; and the notices at issue in this case didn’t request payment from plaintiff, they merely informed plaintiff that the foreclosure process had begun and explained the foreclosure timeline. Therefore, the court affirmed the dismissal of the FDCPA claim. The court also concluded where, as here, the district court dismisses a claim and instructs the plaintiff not to refile the claim unless he includes certain additional allegations that the plaintiff is unable or unwilling to make, the dismissed claim is preserved for appeal even if not repleaded. Therefore, the court remanded to the district court to consider plaintiff's TILA rescission claim in light of Merritt v. Countrywide Fin. Corp. View "Vien-Phoung Thi Ho v. ReconTrust Co." on Justia Law

Posted in: Banking, Consumer Law