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Category Archives: Special Assets Litigation

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FIRREA Protects Purchasing Banks Against Some Claims Disguised as Affirmative Defenses

Posted in FDIC Related Issues, Special Assets Litigation

As previously discussed on this blog, the Financial Institutions Reform, Recovery, and Enforcement Act (“FIRREA”) creates a mandatory administrative claims process  for claims against the assets of failed financial institutions.  If a party with a claim against a failed bank does not comply with FIRREA’s requirements, then that party is generally barred from later raising… Continue Reading

A Potential Defense for Purchasing Banks Against Lender Liability Claims Based on the Actions of a Failed Bank

Posted in FDIC Related Issues, Special Assets Litigation

Previous posts discussed how the Financial Institutions Reform, Recovery, and Enforcement Act (“FIRREA”) creates a mandatory administrative claims process for claims against the assets of failed financial institutions.  If a party with a claim against a failed bank does not comply with FIRREA, then that party is barred from later bringing that claim in federal… Continue Reading

Jurisdiction After Settlement Agreements

Posted in Debt and Judgment Collection, Special Assets Litigation

In the midst of litigation, the lender and the borrower often reach a settlement and execute a settlement agreement.  Sometimes, the settlement agreement calls for the immediate resolution of the lawsuit, so the lender complies by dismissing the lawsuit.  But what happens if the borrower later breaches the settlement agreement?  The lawsuit was dismissed, so… Continue Reading

The FDIC’s Administrative Claims Process for Failed Banks

Posted in FDIC Related Issues, Residential Foreclosure, Special Assets Litigation

Enacted by Congress after the Savings and Loan Crisis of the 1980s, the Financial Institutions Reform, Recovery, and Enforcement Act (“FIRREA”) gives the FDIC sweeping authority to resolve the problems posed by a failed financial institution. This authority includes a mandatory administrative claims process to help the FDIC efficiently identify all claims against the receivership… Continue Reading

An Exception to the Fair Market Value Rule: Use the Foreclosure Sales Price for a Deficiency after a Third Party Purchaser

Posted in Commercial Lending, Debt and Judgment Collection, Residential Foreclosure, Special Assets Litigation

If the value of a foreclosed property is less than the loan amount, lenders may seek a deficiency judgment from borrowers and guarantors after the foreclosure sale. In most cases, the lender is the sole bidder at the sale and takes title to the collateral property, so the court must determine the fair market value… Continue Reading

What is an Allonge?

Posted in Commercial Lending, Debt and Judgment Collection, Residential Foreclosure, Special Assets Litigation

Given the importance of the allonge in establishing a bank’s standing in commercial foreclosure cases, you may be surprised that the term “allonge” is nowhere to be found in Florida’s Commercial Code. In one case, the court describes an allonge as “simply an elegant-sounding legal term for a supplemental attachment to a note in which endorsements… Continue Reading

Question Certified to the Florida Supreme Court: Can Lenders Cure Standing Defects?

Posted in Special Assets Litigation

Establishing standing—the legal basis of a plaintiff’s right to bring suit—to enforce a promissory note is a critical aspect of any foreclosure action. Florida case law requires that the party seeking to foreclose have standing at the time the lawsuit is filed. This can be problematic for lenders who own notes which have been sold… Continue Reading

Discovery of Loss-Share Payments in Litigation: Public Policy

Posted in FDIC Related Issues, Special Assets Litigation

Financial institutions seeking to challenge discovery relating to Loss-Share Agreements and payments from the FDIC should be able to do so on the grounds of relevance, as we previously discussed. A second argument against such discovery is based on the public policy underlying Loss-Share Agreements. Reducing a creditor’s claim based on the amount that it… Continue Reading

Managing Litigation Cost – Florida’s Expedited Foreclosure Procedure

Posted in Debt and Judgment Collection, Loan Workouts, Special Assets Litigation

This article is the final article of a series and is excerpted from my book entitled Mortgage Foreclosure and Loan Collection: A Practical Guide for Lenders which is now available at Amazon.com. Here, we discuss Florida’s show cause procedure as a means of expediting mortgage foreclosure cases and therefore reducing cost. On average, a Florida… Continue Reading

FDIC Loss-Share Agreements: Branch Banking & Trust Company v. Kraz, LLC

Posted in FDIC Related Issues, Special Assets Litigation

There is a common misconception among borrowers that the application of Loss-Share Agreements may result in “windfalls” to institutions that acquire assets of failed banks from the FDIC. They reason that the acquiring institution will receive both reimbursement for its losses from the FDIC and recovery from the borrowers.” However, this inaccurately depicts how Loss-Share… Continue Reading

Managing Litigation Cost – Discovery and Summary Judgment Motions

Posted in Debt and Judgment Collection, Loan Workouts, Special Assets Litigation

This article is the second of a series and is excerpted from my book entitled Mortgage Foreclosure and Loan Collection: A Practical Guide for Lenders which is now available at Amazon.com. Here, we discuss the impact of the discovery process and summary judgment motions on litigation cost. The discovery process can be a very expensive… Continue Reading

Discovery of Loss-Share Payments in Litigation: Irrelevant

Posted in FDIC Related Issues, Special Assets Litigation

In foreclosure actions based on assets of a failed bank, borrowers sometimes attempt to discover whether and how much the FDIC has reimbursed the acquiring institution for its loss under the loan. In doing so, borrowers hope to claim that their liability for the debt should be set-off by any amount the acquiring institution has… Continue Reading

FDIC Loss-Share Agreements: Overview

Posted in FDIC Related Issues, Special Assets Litigation

Once a bank’s primary regulator has determined to close a bank, the Federal Deposit Insurance Corporation steps in to “resolve” it, usually by accepting appointment as the bank’s receiver. Before being formally appointed, the FDIC has typically engaged in substantial evaluation of the bank’s assets and liabilities and solicited bids from solvent banks or other… Continue Reading

Enforcing a Lost Promissory Note

Posted in Banking Operations, Commercial Lending, Commercial Real Estate Lending, Debt and Judgment Collection, Dischargeability of Debts, Loan Sales and Syndications, Residential Foreclosure, Residential Real Estate Lending, Special Assets Litigation

In Florida, it is well established that the original promissory note must be surrendered to the court as a condition of its enforcement. What do you do when you cannot find the original promissory note? Florida Statutes 673.3091 sets out a procedure to follow in order to  “reestablish” a lost note and provides that a… Continue Reading

Usury in Florida: Using the 365/360 Method to Calculate Interest

Posted in Banking Operations, Special Assets Litigation

Many lending institutions use the 365/360 method of calculating interest on their loans.  This method involves applying the ratio of the annual interest over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding.  Many state and federal courts have held the… Continue Reading

HB 87 – A Summary of Florida’s New Foreclosure Law – Part 2: A Closer Look at F.S. 702.015

Posted in Residential Foreclosure, Special Assets Litigation

One of the new statutes created by HB 87 is 702.015. I referenced this in a prior blog post on July 11, 2013. In reviewing the statute in detail, I find it somewhat unclear as to whether the statute applies only to residential foreclosures or to both residential and commercial foreclosures, depending upon which section… Continue Reading

Usury in Florida: The Limited Application of the Savings Clause

Posted in Banking Operations, Special Assets Litigation

A usury savings clause is a provision in a loan document that attempts to negate any other provisions therein that might result in the extraction of an illegal interest rate. Common examples of savings clauses includes the following: Notwithstanding any provisions in this note to the contrary, no interest, charges, or other payments in excess… Continue Reading

The Perils of Post-Judgment Pre-Sale Modifications

Posted in Banking Operations, Commercial Lending, Commercial Real Estate Lending, Debt and Judgment Collection, Loan Workouts, Residential Foreclosure, Residential Real Estate Lending, Special Assets Litigation

A reasonable workout often remains the prudent choice for defaulted commercial real estate loans even in the context of a pending (or nearly completed) foreclosure action. Thus, it is not surprising that we have seen a number of foreclosure cases where the bank and debtor entered into a modification agreement after obtaining a foreclosure judgment… Continue Reading

Managing Litigation Cost: Pre-Lawsuit File Review

Posted in Debt and Judgment Collection, Loan Workouts, Special Assets Litigation

In today’s environment, clients are more cost-conscious than ever and this is in direct conflict with the ever-increasing cost of litigation. There are, however, some common sense ways in which a case can be managed in order to help minimize the associated fees and costs. This article is the first of a series and is… Continue Reading

HB 87 – A Summary of Florida’s New Foreclosure Law – Part 1

Posted in Residential Foreclosure, Special Assets Litigation

In prior posts we analyzed the main components of HB 87, the bill introduced in the Florida legislature which proposed significant changes to certain aspects of Florida’s mortgage foreclosure process. The bill was signed into law by Governor Scott and was effective as of June 7, 2013. In this and future posts we will review… Continue Reading

HB 87 – Florida’s Foreclosure Bill Becomes Law

Posted in Debt and Judgment Collection, Special Assets Litigation

In two prior posts, we analyzed the main components of HB 87, the bill introduced in the Florida legislature which proposed significant changes to certain aspects of Florida’s mortgage foreclosure process. Last week, the bill was signed into law by Governor Scott. There are, of course, both proponents and opponents to this new law but… Continue Reading

Attention All REO Officers: Florida’s Commercial Landlord/Tenant Laws May Apply to You!

Posted in Banking Operations, Special Assets Litigation

When foreclosing mortgages on commercial properties in Florida, banks are often able to choose whether to keep or remove the tenants after foreclosure. The decision to keep or remove a tenant usually depends on the financial value that the tenant adds to the property. For instance, having a reputable business as a tenant with a… Continue Reading

Post-Judgment Recovery of Attorney’s Fees and Costs

Posted in Debt and Judgment Collection, Special Assets Litigation

One of the issues faced by a judgment creditor in pursuing collection of the judgment is the amount of attorney’s fees and costs that will be incurred in the collection efforts. They can be substantial and are generally not recoverable. There are, however, a few statutory provisions which may facilitate recovery of fees and costs… Continue Reading