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Category Archives: Special Assets Litigation

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U.S. Supreme Court Rules Borrowers May Rescind Residential Mortgage Loans by Written Notice

Posted in Special Assets Litigation

The Truth in Lending Act (“TILA”) requires lenders to make certain disclosures to borrowers before the parties close on a residential mortgage.  TILA also affords borrowers the right to rescind a mortgage for any reason for three day after the transaction.  Furthermore, if a lender fails to make the disclosures that TILA requires, then the… Continue Reading

Authenticating Evidence In Support of Summary Judgment

Posted in Special Assets Litigation

Florida’s Fifth District Court of Appeal recently filed an opinion that emphasizes the importance of properly authenticating evidence in support of a motion for summary judgment.  In Colon v. JP Morgan Chase Bank, N.A. et al., 2015 WL 477629 (Fla. 5th DCA Feb. 6, 2015), the court considered the argument of a borrower who appealed… Continue Reading

Acceleration and Florida’s Five-Year Statute of Limitations

Posted in Debt and Judgment Collection, Special Assets Litigation

Florida’s Third District Court of Appeal recently filed an opinion that illuminates when a lender’s acceleration of debt triggers the five-year statute of limitations.  In Snow v. Wells Fargo Bank, N.A., 2015 WL 160326 (Fla. 3d DCA Jan. 14, 2015), the court considered the argument of borrowers who appealed a foreclosure judgment on the basis… Continue Reading

Marriage Equality and The Equal Credit Opportunity Act

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

On January 1, 2015, United States District Judge Hinkle issued an Order  ruling that all Florida counties are to start issuing marriage licenses to same-sex couples as of January 6, 2015. The implications of this ruling are significant for same-sex couples, and their creditors as well. There are various legal aspects to consider as Florida law… Continue Reading

IBERIABANK v. Beneva

Posted in Banking Operations, FDIC Related Issues, Special Assets Litigation

When an institution acquires a failed bank from the FDIC as Receiver and then faces litigation arising from the failed bank’s loans, FDIC “special powers” can often be asserted by the institution, as assignee of the FDIC as Receiver, to bar certain claims or defenses brought by the borrowers.  In November 2012, the United States… Continue Reading

Authenticating Loan Records From Prior Lenders

Posted in Debt and Judgment Collection, Special Assets Litigation

In special assets litigation, a bank offers into evidence its own loan records as well as the records of other lenders who previously serviced the loan.  However, Florida courts treat these records as inadmissible hearsay until the lender demonstrates that the records satisfy the business records exception to the hearsay rule.  A recent decision, Holt… Continue Reading

Florida Deficiency Proceedings: Costs Recoverable Following Foreclosure

Posted in Debt and Judgment Collection, Special Assets Litigation

Following a foreclosure sale, a lender may seek to obtain a deficiency judgment against the borrower and guarantors for the difference between the amount of the debt (as listed in the foreclosure judgment) and the value of the property.  As part of this effort, a lender may also be able to recover certain costs. As… Continue Reading

Holding a Deed in Lieu in Escrow

Posted in Special Assets Litigation

To avoid foreclosure, a borrower might agree to execute a deed in lieu of foreclosure to be held in escrow.  In these circumstances, the borrower would execute a deed-in-lieu of foreclosure to the mortgaged property in favor of the lender.  The deed would be held by the lender or other third party in escrow for… Continue Reading

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