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The Supreme Court of Arkansas recently held that the sale notices used by some Arkansas law firms was too vague to satisfy the requirements of the Arkansas Statutory Foreclosure Act (the “Act”). Davis v. PennyMac Loan Services, LLC, 2020 Ark. 180 (May 7, 2020) In order to initiate a statutory foreclosure, the Act requires the recording of a Notice of Default and Intention to Sell (“Notice”) that states “the default for which the foreclosure is made.” Ark. Code Ann. § 18-50-104(b). The Notice at issue in Davis stated that “a default has been made with respect to a provision in the mortgage” (emphasis added). The Court found that such boilerplate language was not specific enough description of the default to satisfy the Act. As the attorneys for the borrowers in Davis argued, such vague language does not disclose whether the default that caused the foreclosure was a payment default or some other type of default provided for in the mortgage document such as destruction of the property, making false statements to the lender in order to obtain the loan, or permitting the presence of hazardous substances. We recommend that servicers check with their attorneys to be sure the language used in their form Notices will survive the scrutiny they will be subjected to in light of Davis. Moreover, servicers and attorneys alike should be cautious of using one-size-fits-all forms that do not take into account the specific type of default for which the foreclosure is made. Questions? Contact Mitchell Berry, Esq. here. CARES ACT: Foreclosure mratoriums legislated by the CARES Act expired as of May 17, 2020. However, Fannie Mae, Freddie Mac, FHA, and VA have each issued additional directives extending the moratoriums until June 30, 2020, excluding Vacant and Abandoned Properties. Access our complete Coronavirus Response blog, #PadgettPrepared, for more pandemic-response information. Fannie Mae: FNMA has extended the suspension of foreclosure-related activities through June 30, 2020. “During the period of the extension, servicers may not, except with respect to a vacant or abandoned property, initiate any judicial or non-judicial foreclosure process, move for a foreclosure judgment or order of sale, or execute a foreclosure sale. This suspension does not apply to mortgage loans secured by properties that have been determined to be vacant or abandoned.” Freddie Mac: Freddie Mac has extended the suspension of foreclosure-related activities through June 30, 2020. “During the period of the extension, servicers may not, except with respect to a vacant or abandoned property, initiate any judicial or non-judicial foreclosure process, move for a foreclosure judgment or order of sale, or execute a foreclosure sale. This suspension does not apply to mortgage loans secured by properties that have been determined to be vacant or abandoned.” FHA/HUD: HUD has placed a moratorium on occupied FHA mortgages through June 30, 2020, which applies to the “initiation of foreclosures and to foreclosures in process”. The moratorium does not apply to vacant and abandoned properties. VA: VA has placed a moratorium on occupied FHA mortgages through June 30, 2020, which applies to the “initiation of foreclosures and to the completion of foreclosures in process”. The moratorium does not apply to vacant and abandoned properties. USDA: Moratorium extended to June 30, 2020. Does not apply to vacant and abandoned properties. Read more here. Questions? Contact Marissa Yaker, Esq. here. Recently, several national title insurance companies have sent out bulletins to their agents regarding their company's position on how the CARES Act is affecting the industry. Specifically, some of the title insurance companies are requiring additional steps in order to insure properties related to foreclosure sales held during the moratoriums imposed by the CARES Act. At least one title insurance company has decided to not insure any property related to a foreclosure action during the timeframe that the CARES Act applies, whether the Act covers that property or not. These measures from the title insurance companies will apply to any foreclosure sale held between March 18, 2020 through May 17, 2020 during the current period the Act is in place. Of note, these restrictions and additional requirement also apply to any post-foreclosure conveyances and REO transactions. This will affect any conveyance to HUD or the VA since title insurance policies are required to be submitted along with the title packages. The CARES Act continues to have an impact on the industry, so it is important to understand the potential challenges with obtaining title insurance for post-foreclosure processes including conveyances and REO. PLG has been diligent in working with multiple national title insurance companies to ensure our clients' post-foreclosure needs are met. We have a plan in place in order to issue the title insurance policies in compliance with the requirements set forth by the title insurance companies so our clients' sales subject to conveyance and REO transactions can move forward. PLG is also continuing to stay connected to the local title insurance underwriters for any changes in their requirements as the industry moves forward during these unique times. Questions? Contact Ryan K. Martinez, Esq. here. With the recent decision in Federal Home Loan Mortgage Corporation v. Zepeda, No19-0712, the Texas Supreme Court issued a significant decision in favor of home equity lenders in, answering the question, “Is a lender entitled to equitable subrogation, where it failed to correct a curable constitutional defect in the loan documents under §50 of the Texas Constitution?” Or more specifically, “If the party seeking equitable subrogation could have satisfied the requirements of §50(a)(6)(Q)(ix) but failed to do so, does that failure preclude it from invoking equitable subrogation?” On April 20, 2020, the United States Court of Appeals for the Fourth Circuit in the Western District of Virginia, in Stepp v. U.S. Bank Trust National Association, Case No. 19-1067 held that “a bank office that conducts no mortgage related business does not qualify as a branch office of a mortgagee under the regulatory exception. “According to Stepp, U.S. Bank improperly initiated foreclosure without first offering her a face to face meeting as required by 24 CFR 203.604(b). U.S. Bank argued that it was exempt from the face to face meeting requirement under 24 CFR 203.604(c)(2) which excuses the meeting when the mortgaged property is not within 200 miles of the mortgagee, its servicer, or a branch office of either.” Because U.S. Bank’s Richmond office, the only one within 200 miles of Stepp’s home, conducted no mortgage related business and was not open to the public, U.S. Bank contended it did not qualify as a branch office of a mortgagee and so the exception applied. The Fourth District Court of Appeal held that the text of 24 CFR 203.604(c)(2) cannot be read to encompass an office at which no mortgage related business is conducted. An office that does not mortgage related business at all, even if within 200 miles of a mortgagor’s home, will be poorly positioned to discuss the mortgage specific loss mitigation options. Note: this is a decision out of the Western District of Virginia and is not binding in all jurisdictions. Questions? Contact Marissa Yaker, Esq. here. Servicers operating in Ohio and Florida should consider these recent property registration updates from ProChamps:
Questions? Contact Michelle DeVore. here. |
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The information contained on this blog shall not constitute legal advice or a legal opinion. The existence of or review and/or use of this blog or any information hereon does not and is not intended to create an attorney-client relationship. Further, no information on this blog should be construed as investment advice. Independent legal and financial advice should be sought before using any information obtained from this blog. It is important to note that the cases are subject to change with future court decisions or other changes in the law. For the most up-to-date information, please contact Padgett Law Group (“PLG”). PLG shall have no liability whatsoever to any user of this blog or any information contained hereon, for any claim(s) related in any way to the use of this blog. Users hereby release and hold harmless PLG of and from any and all liability for any claim(s), whether based in contract or in tort, including, but not limited to, claims for lost profits or consequential, exemplary, incidental, indirect, special, or punitive damages arising from or related to their use of the information contained on this blog or their inability to use this blog. This Blog is provided on an "as is" basis without warranties of any kind, either express or implied, including, but not limited to, warranties of title or implied warranties of merchantability or fitness for a particular purpose. |
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