Source: https://commercialforeclosureblog.typepad.com/indiana_commercial_forecl/page/2/
Timestamp: 2019-04-25 00:15:51+00:00

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Over the last couple weeks, I've been working with the good folks at Typepad to "tune up" my blog. You'll notice the new look and feel, which generally mirrors that of my Firm's website. I've fixed several links that were outdated, and I've added a new mortgage servicing category.
1. I'm now mobile friendly, which means that the site reads much better on a smartphone or tablet.
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Happy New Year to you and yours, and thanks for reading.
Lesson. A mortgage loan servicer in a RESPA case can successfully defend the matter if it can show that it did not injure the borrower/mortgagor, even if the defendant did not adequately respond to the qualified written request (QWR).
Legal issue. Whether Borrower’s alleged non-receipt of a Servicer’s QWR response caused or aggravated her alleged injuries.
Vital facts. Plaintiff Borrower bought a house in 2004 and lived there with multiple family members. Borrower’s mother later asked her to move out, at which point Borrower stopped paying on her mortgage loan. In 2014, the last remaining family member moved out of the house, leaving it vacant and subject to vandalism. The vandalism produced insurance money that went to Defendant mortgage loan servicer (Servicer) to be held in escrow. Servicer disbursed a portion of the insurance proceeds to pay a contractor, which later abandoned the job due to fears over being paid in full for its work. In 2015, the house was vandalized twice more and was further damaged from a storm. Borrower sent Servicer a letter on September 5, 2015 asking about the status of her loan and how the 2014 insurance money was being handled. Servicer sent a response ten days later, but Borrower said she never received it. Borrower claimed that suffered from depression and anxiety arising out of the issues with her house, as well as problems from divorce, foreclosure proceedings and money concerns.
Procedural history. Based upon the assertion that she did not receive the letter response from Servicer, Borrower filed suit against Servicer in federal court under the Real Estate Settlement Procedures Act (RESPA). The U.S. District Court for the Southern District of Indiana granted summary judgment for Servicer, and Borrower appealed to the Seventh Circuit Court of Appeals.
Key rules. For purposes of their decisions, both the district court and the Seventh Circuit in Linderman assumed that Borrower’s September 5, 2015 letter to Servicer constituted a QWR under RESPA, 12 USC 2605(e)(1)(B). The Linderman opinion also assumed that Servicer breached RESPA based upon Borrower’s allegation that she did not receive the letter response, even though RESPA, including specifically 12 CFR 1024.11, provides that the mailing of a timely and properly-addressed response to a QWR likely satisfies the requirements under the statute – whether or not the response is received. Even with these favorable assumptions, Borrower still lost.
RESPA requires servicers upon receipt of a QWR to, among other things, (a) correct errors in records or (b) provide appropriate information if no error needs fixing. Section 2605(e)(2)(A-B). RESPA also requires servicers to refrain for sixty days from taking steps that would jeopardize a borrower’s credit rating. Section 2605(e)(3). But to ultimately prevail on a claim for money damages, a borrower still must prove “actual damages” under Section 2605(f)(1)(A) – something Borrower failed to do in Linderman.
Holding. The Seventh Circuit affirmed the summary judgment for Servicer.
My practice includes defending lenders, as well as their mortgage loan servicers, in federal court cases brought by borrowers. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at john.waller@woodenlawyers.com. Also, don’t forget that you can follow me on Twitter @JohnDWaller or on LinkedIn, or you can subscribe to posts via RSS or email as noted on my home page.
Yikes. Did you know that Indiana has a set of regulations that deal with the cleanup of properties contaminated by the manufacture of illegal drugs? Did you know that, for instance, an innocent buyer at a sheriff's sale arguably could be compelled by the State of Indiana to cleanup a house previously utilized as a meth lab?
The Law. Title 410 of the Indiana Administrative Code, Article 38, entitled Inspection and Cleanup of Property Contaminated with Chemicals Used in the Illegal Manufacture of Controlled Substance, governs this matter. Even though the regulation never mentions mortgage foreclosures or sheriff's sales, a handful of key provisions point to the idea that even a totally innocent buyer at a sale, with no prior knowledge of any contamination, could be required to pay for a cleanup before either living in the house or, perhaps more on point here, liquidating the post-foreclosure. 410 IAC 39-2-18-1 defines "owner" as "a person having an ownership interest in the contaminated property." 410 IAC 38-3-2 goes on to require the owner to cleanup the property before occupying it or "transferring any interest in the property to another person."
The Impact. Other than a client once asking me to interpret the law, admittedly I've never had to litigate this issue, nor have I been involved in a dispute with the State surrounding the law's applicability. Nevertheless, it seems to me that residential mortgage loan servicers should be aware of these rules in the event they learn, either pre or post-sheriff's sale, that they service a mortgage on a house contaminated by the manufacture of illegal drugs (i.e. a meth lab). By foreclosing on a meth lab, the lender/mortgagee could end up with an expensive mess on its hands.
The Rub. The potential exposure to cleanup liability is similar to the environmental exposure discussed in my 9/24/09 post Always Consider An Environmental Liability Analysis, geared more toward commercial foreclosures. (See also, Real Estate Appraisals Are Important, But Not Required, In Indiana Foreclosures.) One difference between the environmental topic I previously discussed and today's subject is that it may be difficult if not impossible for a foreclosing lender or a sheriff's sale buyer to know about a meth lab before the sheriff's sale. Ideally, a foreclosing mortgagee or potential buyer would inspect the interior of the house before any sale, but that's not always possible absent consent by the owner/mortgagor or perhaps a clear abandonment by the occupant.
More Info. I understand that the State agency that oversees these matters is the Indiana State Department of Health, Environmental Public Health Division. For details about the State's program, the Division's website has a plethora of information. Start by clicking here, but note the "Cleanup and Inspection of Illegal Drug Labs" button on the left side of the home page.
Lesson. A borrower-mortgagor’s challenge to a lender-mortgagee’s execution of a writ of assistance needs to occur in the state court foreclosure action, not in a subsequent federal court case. Even then, there’s not much the borrower can do about the writ, which essentially is the process to evict the former owner following a sheriff’s sale.
Legal issue. Whether a borrower/mortgagor had a viable federal court claim against his lender (the mortgagee) for damages arising out of the manner in which a state court writ of assistance was executed.
Vital facts. A borrower lost a state court mortgage foreclosure action, and his property was sold at a sheriff’s sale. The lender then obtained a writ of assistance in order to take possession of the property. Movers later loaded the borrower’s belongings onto a truck and locked him out of the house. Among other things, the borrower, in this subsequent federal case, claimed that the lender should not have taken possession of his property and that some of his belongings were damaged after they were removed.
Procedural history. The defendants, including the lender/mortgagee, filed a Rule 12(b)(6) motion to dismiss the borrower’s claims.
Key rules. For the rules related to Trial Rule 70(A) writs of assistance, please click on the related blog posts below. One guideline of particular importance here is the Seventh Circuit precedent establishing that “the sheriff has the ‘right and duty’ to execute the writ of assistance immediately upon receiving it,” so the borrower (former owner) cannot claim that the writ was executed without delay.
Holding. In Holt, the U.S. District Court for the Northern District of Indiana granted the defendants’ motions and dismissed the borrower’s case.
Policy/rationale. The borrower alleged that the lender wrongfully seized his property because it executed the writ of assistance while the borrower was contesting the foreclosure. However, the state court had already entered the foreclosure judgment, and the sheriff had already sold the mortgaged property. As such, the borrower “had already lost that dispute.” The foreclosure order entitled the lender to immediate possession of the real estate and directed the sheriff to enter the property and remove the borrower from it.
As to the borrower’s personal property, his complaint did not allege that the lender actually performed the lockout or took the belongings. Rather, an independent contractor performed those acts. Also the Court noted the principle that the borrower “could have avoided his trouble by moving out voluntarily and promptly when [the lender] obtained title to the property as opposed to forcing [the lender] to utilize the sheriff’s department to enforce the court’s decision.” In the end, the Court in Holt concluded that the borrower did not identify a basis upon which the lender could be liable for negligence.
I represent lenders, as well as their mortgage loan servicers, in connection with contested mortgage foreclosure cases and related claims. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at john.waller@woodenlawyers.com. Also, don’t forget that you can follow me on Twitter @JohnDWaller or on LinkedIn, or you can subscribe to posts via RSS or email as noted on my home page.
1. The borrower did not convince the Court that the standard for an injunction was met. Primarily, the Court found the borrower was not reasonably likely to succeed on the merits of his claims (for FDCPA and TILA) violations.
2. The TRO was barred by the Rooker-Feldman doctrine.
3. There was no evidence that the borrower gave prior notice to the defendants of the TRO as the law required him to do.
Lesson. Absent a fully-executed TPP, signed by a lender or its mortgage loan servicer, no enforceable contract exists, and a borrower’s claim against a lender based upon a TPP, or under HAMP, will be dismissed. In other words, an alleged loan modification agreement requires the signature of the lender.
Legal issue. The main question in Taylor was whether the Home Affordable Modification Program's Trial Period Plan constituted an enforceable contract between a lender and a borrower. A secondary issue was whether the lender was liable for breach of an implied covenant of good faith and fair dealing.
Vital facts. Borrower and his residential/consumer lender discussed a loan modification pursuant to the Home Affordable Modification Program (“HAMP”). Specifically, the lender sent the borrower a letter offering a HAMP Trial Period Plan (“TPP”). The TPP had certain terms and included certain steps for the borrower to complete before the lender would modify the mortgage loan. One of the conditions to the TPP was that the lender must provide the borrower with a fully-executed copy of the TPP; otherwise, there would be no loan modification. In Taylor, the borrower purportedly submitted the necessary paperwork, but the lender never returned an executed copy of the TPP. The borrower claimed that he qualified for a loan modification under HAMP but that the lender improperly denied the request.
Procedural history. The borrower filed a breach of contract action against the lender. The lender filed a motion for judgment on the pleadings. The U.S District Court for the Northern District of Indiana granted the lender’s motion and dismissed the borrower’s case.
Indiana case law involving HAMP provides that the language of the TPP is clear that it is not an offer by lenders that borrowers can accept simply by providing further documentation. Instead, the TPP is an invitation for borrowers to apply to the program, which requires the borrowers’ compliance to be considered. Cases around the country generally provide that a TPP does not take effect until the lender provides a signed copy.
There is no separate cause of action in cases like these for breach of an implied covenant of good faith and fair dealing.
TPP’s are not agreements to provide borrowers with a loan at a specified date, but rather are agreements governing obligations of both lenders and borrowers over a trial period after which lenders may extend a separate permanent loan modification should lenders determine that borrowers qualify.
The alleged contract was not for the sale of goods governed by the Uniform Commercial Code and was not the sale of insurance. Moreover, the mortgage did not give rise to any fiduciary or other special relationship. Thus the borrower’s complaint did not articulate the independent tort of breach of good faith/fair dealing.
I represent lenders, as well as their mortgage loan servicers, in connection with contested mortgage foreclosures and related litigation. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at john.waller@woodenlawyers.com. Also, don’t forget that you can follow me on Twitter @JohnDWaller or on LinkedIn, or you can subscribe to posts via RSS or email as noted on my home page.
Indiana Court Finds That Large Crane And Saw For Stone Fabricating Business Were Not "Fixtures"
Lesson. In title and priority disputes surrounding alleged “fixtures,” the parties’ intention is the controlling factor.
Case cite. 11438 Highway 50 v. Luttrell, 81 N.E.3d 261 (Ind. Ct. App. 2017).
Legal issue. Whether certain pieces of equipment were fixtures subject to a lender’s mortgage.
Vital facts. This case dealt with a crane and a saw owned by a limestone sawing business. The business operated out of a building the partners constructed on the back edge of some real estate owned by a separate corporation. A lender held a mortgage on the real estate and also had on file a UCC financing statement claiming an interest in, among other things, equipment and fixtures of the corporation (but not the sawing business).
Procedural history. The lawsuit started when one of the two partners in the limestone sawing business sued the other partner for, among other things, possession of the crane and the saw. Later, the lender (mortgagee) intervened in the action, foreclosed on the real estate and asserted a first-priority security interest in the crane and the saw. The trial court awarded the equipment to the plaintiff (the partner), and the lender/mortgagee appealed.
Policy/rationale. The equipment in Luttrell was annexed to the real estate and assembled in a building meant to accommodate it. However, the saw (14’x7’) could be disassembled in two days and transferred to a new place via semi-truck. The crane weighed 50 tons, but also could be moved if needed. The sawing business purchased the equipment, and the partners intended for it to remain their personal property after installation. Also, the sawing business and the borrower’s/mortgagor’s business were independent from one another, and the original plan of the partners was to save up money to buy the building.
Seemingly most fixture-related disputes are between creditors who are fighting over the debtor’s property. Here, the dispute was between a creditor and a third-party owner (not a borrower). The fact that the mortgagor/borrower did not own the equipment, and thus could not have pledged it as collateral, probably carried the day.
Related post. What Is A Fixture?
I represent creditors, as well as mortgage loan servicers, entangled in lien priority and title disputes. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at john.waller@woodenlawyers.com. Also, don’t forget that you can follow me on Twitter @JohnDWaller or on LinkedIn, or you can subscribe to posts via RSS or email as noted on my home page.
Lesson. When negotiating guaranties, or litigating rights under them, know that courts will slice and dice the language within the guaranty in order to determine the parties’ intent and reach an appropriate outcome. Every word can be important.
Case cite. 1st Source Bank v. Neto, 861 F.3d 607 (7th Cir. 2017).
Legal issue. Whether language in a guaranty allowed for parallel litigation in the United States (Indiana) and Brazil.
This guarantee shall be governed by and construed in accordance with the laws of the state of Indiana .… In relation to any dispute arising out of or in connection with this guarantee the guarantor [i.e., the defendant guarantor] hereby irrevocably and unconditionally agrees that all legal proceedings in connection with this guarantee shall be brought in the United States District Court for the District of Indiana located in South Bend, Indiana, or in the judicial district court of St. Joseph County, Indiana, and the guarantor waives all rights to a trial by jury provided however that the lender [i.e., the plaintiff lender] shall have the option, in its sole and exclusive discretion, in addition to the two courts mentioned above, to institute legal proceedings against the guarantor for repossession of the aircraft in any jurisdiction where the aircraft may be located from time to time, or against the guarantor for recovery of moneys due to the lender from the guarantor, in any jurisdiction where the guarantor maintains, temporarily or permanently, any asset. The parties hereby consent and agree to be subject to the jurisdiction of all of the aforesaid courts and, to the greatest extent permitted by applicable law, the parties hereby waive any right to seek to avoid the jurisdiction of the above courts on the basis of the doctrine of forum non conveniens.
The guarantor defaulted under the guaranty, and the lender sued to collect in both Indiana federal court (where the lender was located) and in a court in Brazil (where the airplane and other of the guarantor’s assets were located).
Procedural history. The guarantor, in the Indiana case, sought “antisuit injunctive relief” to prevent the lender from suing him in Brazil. The trial court denied the guarantor’s motion, and the guarantor appealed to the Seventh Circuit, which issued the opinion that is the subject of today’s post.
Holding. The Seventh Circuit Court of Appeals affirmed the District Court’s decision.
Policy/rationale. The guarantor had five contentions in support of his position, all of which the Court rejected. First, the clause did not limit venue to Indiana. Second, the clause did not limit the suit to either Brazil or Indiana. Third, the guarantor’s “judicial estoppel” argument had no merit. Fourth, the clause did not violate public policy. Finally, the Court found that the Brazil suit was not “vexatious or duplicative” of the Indiana action. In the final analysis, the Court carefully studied the words in the operative guaranty provision, and the Court’s interpretation of those words carried the day. For more detail on the Court’s analysis, or to better understand how a court might interpret your guaranty provision, please review the Court’s opinion (link above).
I represent both lenders and guarantors in commerical loan enforcement actions. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at john.waller@woodenlaweyrs.com. Also, don’t forget that you can follow me on Twitter @JohnDWaller or on LinkedIn, or you can subscribe to posts via RSS or email as noted on my home page.
Lesson. Depending upon the facts, a newly-formed company can be liable for a separate, but related, company’s debts under Indiana’s “successor liability” doctrine.
Case cite. Continental Casualty v. Construct Solutions, 2017 U.S. Dist. LEXIS 76396 (S.D. Ind. 2017) (pdf).
Legal issue. Whether Company 2 was a successor company of Company 1 and thus responsible for Plaintiff’s contract damages because Company 2 was either a “de facto merger” or a “mere continuation” of Company 1.
Vital facts. Continental Casualty was a breach of contract action. About a year after Defendant Company 1 signed the contract, the owner incorporated Defendant Company 2. Both companies were commercial roofing operations. Company 1’s people controlled the operations of Company 2. The same individual was the president of, and owned, both companies. Both operated from the same location. Company 2 assumed the trade name of Company 1.
Procedural history. Continental Casualty was Judge Tonya Walton Pratt’s opinion on Plaintiff’s motion for summary judgment. Plaintiff asked for a judgment against Defendant Company 2 as the successor company for Defendant Company 1. In other words, Plaintiff sought to hold Company 2 liable for Plaintiff’s losses under its contract with Company 1.
4. Assumption by the successor of the liabilities ordinarily necessary for the uninterrupted continuation of the business of the predecessor.
Holding. The Court granted summary judgment in favor of Plaintiff.
Today’s post follows-up mine from 2/26/17: Borrower’s Claims For Violations of RESPA, TILA, FDCPA, RICO And FPRAM, Together With Claims for Various Torts, Dismissed. For an introduction to the case, Mains v. Citibank, 852 F.3d 669 (7th Cir. 2017), please click on that prior article.
The borrower appealed the District Court’s ruling to the Seventh Circuit Court of Appeals. Click here for the Court's opinion, which thoroughly sets up each of the borrower’s contentions and then knocks them out. Mains provides a road map through Indiana state and federal law under circumstances in which a borrower/mortgagor, in the aftermath of a state court foreclosure, pursues fraud-based remedies in federal court against a lender, a mortgage loan servicer and their law firms.
1. Federal claims not raised in state court, or that do not expressly require review of the state court decision, may be subject to dismissal “if those claims are closely enough related to a state court judgment.” Is the federal plaintiff alleging that the state court judgment caused his injury?
The Court found that “in the final analysis, all of [the borrower’s] claims must be dismissed - most under Rooker-Feldman and a few for issue preclusion [res judicata].” The only thing the Court of Appeals changed was that the dismissal should be without, instead of with, prejudice. (As an aside, the borrower appealed the decision to the United States Supreme Court, which denied his request to hear the case – Mains v. Citibank, 138 S.Ct. 227 (2017)).
Heading out with the family for Spring Break but wanted to offer a quick post about a motion decided last year in our local federal court. The opinion is very short, and Magistrate Judge Tim Baker's report and recommendation later was adopted by Judge Pratt. Click here for the ruling.
The case involved a twist to a charging order on one tenant's in common half-interest in some real estate. The interest arose out of a purchase agreement. The Court concluded that the tenant's "economic interest in the [real estate] should be charged against any unsatisfied part of [judgment creditor's] judgment" against him. The Court thus granted the judgment creditor a lien against the judgment debtor's interest in the real estate.
The debtor claimed that he had no interest in the real estate because he did not actually financially contribute to the purchase, but the purchase agreement listed him as a tenant in common. In arriving at his decision, Magistrate Judge also addressed the law of contribution.
Lesson. Indiana law presumes that spouses own real estate as “tenants by the entirety.” In limited instances, however, the presumption can be overcome based upon language in the deed reflecting an intention to establish a different form of ownership.
Legal issue. Whether the language in the subject deed was sufficiently clear to overcome the presumption of ownership of tenants by the entirety.
Vital facts. In 2002, the owner of the subject real estate conveyed the property to the new owners through a warranty deed that contained this clause: “[Grantor] conveys and warrants to [Underwood], of legal age, and [Kinney] and [Fulford], husband and wife, all as Tenants-in-Common.” In June 2014, a six-figure damages judgment was entered against Underwood and Kinney. In November 2014, Kinney passed away but remained married to Fulford until his death.
Procedural history. In 2015, Underwood filed an action for partition to sell the real estate and distribute the proceeds, presumably to satisfy, at least in part, the judgment. Underwood claimed that she, Kinney and Fulford owned the real estate as three tenants in common. Kinney’s Estate claimed that it did not own the property and that Kinney’s interest had instead passed to Fulford, his spouse, based upon tenants by the entirety ownership. The trial court agreed with the Estate and concluded that the Kinney/Fulford marital unit was a single tenant in common with Underwood. As such, the judgment lien did not attach to Fulford’s one-half interest because the judgment was only against Kinney (and Underwood), not Fulford. Underwood appealed all the way to the Indiana Supreme Court, which issued the opinion that is the subject of today’s post.
if it appears from the tenor of a contract described in subsection (a) that the contract was intended to create a tenancy in common; the contract shall be construed to create a tenancy in common.
Holding. The Supreme Court reversed the trial court and the Indiana Court of Appeals, which had affirmed the trial court. The Court concluded that the language in the deed specifying that the three grantees, two of whom were married, shall take the real estate “all as Tenants-in-Common" rebutted the presumption.
The Court felt that the phrase in the deed “all as Tenants-in-Common” showed the parties’ intent to create a tenancy in common among all three grantees. Specifically, the word “all” established that the grantor did not view “Husband and Wife” as a single entity.
Judgment lien. The main reason I’m writing about Underwood is that the case illustrates the impact of a judgment lien in the context of real estate held by tenants by the entireties vs. tenants in common. The Court found that the interest of Kinney, one of the two judgment debtors, passed to his Estate. Thus the Estate’s one-third share of the partition sale proceeds should go to satisfy the judgment because the judgment lien attached to that third. On the other hand, Fulford, the surviving spouse, would not enjoy the tenancy by the entireties spousal exemption for half of the sale proceeds – only a third. Although the Supreme Court did not address the practical impact of the case, I’m guessing that Underwood’s goals included ensuring that two-thirds (instead of one-half) of the sale proceeds were applied to pay down (or off) the judgment and that Kinney, through his Estate, paid his pro rata share of the debt.
We’ve got a sheriff’s sale next month, in connection with a commercial foreclosure case, in Montgomery County. There, like many counties in Indiana, the sheriff’s office contracts with a third-party company that serves as the sheriff’s agent for purposes of preparing for, and holding, sheriff’s sales. In Montgomery County, the vendor is SRI. Other counties use Lieberman Technologies. Many county sheriff’s departments, such as Marion County’s here in Indianapolis, still run all aspects of the sale internally, however.
Check county rules. Don’t forget that local rules, customs and practices control (pardon any outdated links from that 2010 post). For our sale next month, Montgomery County requires the plaintiff/lender to handle the pre-sale notice publication process. Many if not most counties will cover publication, and then invoice you for the costs. The need for us to do this particular step caused me to dust off the applicable statute to make sure we published the sale notice properly, and timely.
Before selling mortgaged property, the sheriff must advertise the sale by publication once each week for three (3) successive weeks in a daily or weekly newspaper of general circulation. The sheriff shall publish the advertisement in at least one (1) newspaper published and circulated in each county where the real estate is situated. The first publication shall be made at least thirty (30) days before the date of sale.
at the time of placing the first advertisement by publication, the sheriff shall also serve a copy of the written or printed notice of sale upon each owner of the real estate. Service of the written notice shall be made as provided in the Indiana Rules of Trial Procedure governing service of process upon a person.
(See, Service of Process” Fundamentals for the Plaintiff Lender.) My understanding is that, in most instances when a sheriff or its agent requires the plaintiff/lender to handle publication, the sheriff or agent still will perfect service upon the owner themselves. Normally, this is done by certified mail or hand delivery. By the way, if counsel represents the owner, I always include notice to the attorney.
I represent lenders, as well as mortgage loan servicers, in connection with foreclosure cases and sheriff’s sales. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at john.waller@woodenlawyers.com. Also, don’t forget that you can follow me on Twitter @JohnDWaller or on LinkedIn, or you can subscribe to posts via RSS or email as noted on my home page.
Attached, please find two forms to be included with your sale documents beginning with the February 21, 2018 Sheriff Sale and all future Sheriff Sale dates.
The first form is the Assignment of Judgment Cover Sheet that should accompany each individual sale #. The specific language and format that we have provided you in the Assignment of Judgment Cover Sheet may be incorporated within the filed Assignment of Judgment and/or may be attached as a cover sheet with a copy of the filed Assignment of Judgment for verification of the same. This format will eliminate any confusion that may exist within our interpretation, allowing us clear documentation of your intent and help us all to be firm, fair and consistent across the board.
The second form is the Added Costs Sheet which should be used for your added costs for each individual sale #.
All bids; tax clearance forms; cost checks; added costs sheets (to include bid justification); assignment of judgments; and assignment of judgment cover sheets are due in our office no later than 3:00 p.m. on the day prior to the respective Sheriff Sale date.
Deeds; Clerk Returns; Sales Disclosure Forms; recording checks; and removal checks are due in our office no later than 3:00 p.m. the Friday after the respective sale.
Please pass this information along to all it my concern.
In 2010, I posted Indiana Tax Sales, Part II: Redemption, which discussed how parties can redeem real estate from a tax sale. Lenders who lose mortgaged property at a tax sale have the ability to redeem, and one of the issues always is amount of money needed to do so. My prior post includes a discussion of the amounts needed to redeem. One of the elements is interest on any surplus. The purpose of today's post is advise that, as of July 1, 2014, the per annum interest redeemers must pay on the tax sale surplus is 5%. Previously, the amount was 10%. So, it's now less expensive to redeem.
To review the entire Indiana statutory provision applicable to the amount of money required for redemption, click on Ind. Code 6-1.1-25-2.
I often represent lenders, as well as their servicers, entangled in loan-related litigation, including disputes arising out of tax sales. If you need assistance with such a matter, please call me at 317-639-6151 or email me at john.waller@woodenmclaughlin.com. Also, don’t forget that you can follow me on Twitter @JohnDWaller or on LinkedIn, or you can subscribe to posts via RSS or email as noted to your left.
Lesson. First, if you are in the business of drafting and recording mortgages, make sure they contain legal descriptions of the subject real estate. Common (street) addresses technically are inadequate to provide notice of a lien.
Case cite. U.S. Bank v. Jewell, 69 N.E.3d 524 (Ind. Ct. App. 2017).
Legal issue. Whether the omission of a legal description of the real estate rendered the mortgage insufficient to charge a competing mortgagee with notice.
Vital facts. This case involved a mortgage lien priority dispute and dealt with Indiana’s bona fide purchaser (BFP) doctrine. Jewell held a mortgage that it recorded but that failed to contain a legal description. The mortgage only identified the common address a/k/a the street address. When the owner later sold the real estate, the buyer obtained financing from a lender, which conducted a title search before ultimately making the mortgage loan. The evidence established that the lender’s title search did not disclose Jewell’s mortgage.
Procedural history. Jewell filed suit to foreclose its mortgage and named the lender. The lender filed a motion for summary judgment claiming that it was a bona fide purchaser and was entitled to senior lien status. The trial court denied the motion. The lender appealed.
1. Prospective purchasers of real estate must search the grantor-grantee and the mortgagor-mortgagee indexes for the period that the mortgagor holds title.
Notice is actual when notice has been directly and personally given to the person to be notified. Additionally, actual notice may be implied or inferred from the fact that the person charged had means of obtaining knowledge which he did not use. Whatever fairly puts a reasonable, prudent person on inquiry is sufficient notice to cause that person to be charged with actual notice, where the means of knowledge are at hand and he omits to make the inquiry from which he would have ascertained the existence of a deed or mortgage. Thus, the means of knowledge combined with the duty to utilize that means equates with knowledge itself. Whether knowledge of an adverse interest will be imputed in any given case is a question of fact to be determined objectively from the totality of the circumstances.
Holding. The Indiana Court of Appeals reversed the trial court and granted summary judgment for the lender.
Policy/rationale. Jewell dealt mainly with the inquiry notice matter. Jewell contended that, had the lender searched the mortgagor-mortgagee index, it would have discovered Jewell’s mortgage. However, the lender submitted affidavits establishing that it conducted such a search, which did not reveal the Jewell mortgage due to the omission of the legal description. The problem was that Jewell merely argued that the common address was sufficient to defeat the summary judgment motion. Jewell’s failure to submit evidence to prove its theory was the deciding factor.
I frequently represent lenders, as well as their mortgage loan servicers, entangled in lien priority and title claim disputes. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at John.Waller@WoodenLawyers.com Also, don’t forget that you can follow me on Twitter @JohnDWaller or on LinkedIn, or you can subscribe to posts via RSS or email as noted on my home page.
Lesson. Although servicers usually are not the actual owners of residential mortgage loans, they nevertheless may be the proper party to resolve the foreclosure action or to negotiate a settlement. Also, unless the debt was in arrears when the servicer obtained its role, the Fair Debt Collection Practices Act will not apply to communications by the servicer.
Case cite. Turner v. Nationstar, 2017 U.S. Dist. LEXIS (S.D. Ind. 2017) (pdf).
Legal issues. Whether the defendant loan servicer was a “debt collector” subject to the Fair Debt Collection Practices Act (“FDCPA”), specifically 15 U.S.C. 1692e(2)(A). Also, whether the defendant committed a “deceptive act” in violation of the Indiana Home Loan Practices Act (“IHLPA”), Ind. Code 24-9-1 et seq.
Vital facts. For background, click on last week’s post, which also discussed Turner. The borrower claimed that, during a mediation conference, the servicer committed a deceptive act by leading the borrower to falsely think that the servicer owned the loan “such that [borrower] believed he was bargaining with the owner of the loan when he agreed to exchange his counterclaim against [servicer] for a loan modification.” The borrower also alleged that, after the entry of the state court foreclosure judgment, the servicer wrongfully sent the borrower account statements with a debt amount different from the judgment amount.
Procedural history. The defendant servicer filed a motion for summary judgment. Judge Young’s ruling on the motion is the subject of this post.
(B) conceals material information regarding the terms or conditions of the transaction. . . .
For the FDCPA to apply, “two threshold criteria must be met:” (1) the defendant must be a “debt collector” and (2) the communication by the debt collector forming the basis of the claim “must have been made in connection with the collection of any debt.” 15 U.S.C. 1692a(6), c, e and g.
any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.
Loan servicing agents are not “debt collectors” unless the debt was in arrears at the time the servicer obtained that role.
Holding. The Southern District of Indiana granted summary judgment for the servicer on the IHLPA and FDCPA claims brought by the borrower.
As to the IHLPA action, the Court concluded that the servicer did not conceal “material” information about its role/status because the servicer established that it was the proper party to resolve the foreclosure action. In other words, whether the servicer was or was not the owner of the loan was immaterial in the Court’s view.
Regarding the FDCPA claim, the Court found that the defendant was the agent of the original creditor and acted as the servicer “well before [the loan] was in default.” As such, the servicer did not meet the definition of a “debt collector” under the FDCPA.
I frequently represent lenders, as well as their mortgage loan servicers, entangled in consumer finance litigation. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at John.Waller@WoodenLawyers.com. Also, don’t forget that you can follow me on Twitter @JohnDWaller or on LinkedIn, or you can subscribe to posts via RSS or email as noted on my home page.
Lesson. In defending RESPA QWR cases, first examine whether the subject letter is in fact a QWR. Next, assess whether the borrower suffered any actual damages arising out of the alleged failure to respond.
Case cite. Turner v. Nationstar, 2017 U.S. Dist. LEXIS (S.D. Ind. 2017) (.pdf).
Legal issue. Whether the lender/servicer was entitled to summary judgment on the borrower’s three theories for RESPA violations.
Vital facts. The procedural history and the underlying facts of Turner are quite involved. For purposes of today’s post, which focuses on the REPSA claims, the borrower sent three letters (alleged “QWRs,” see last week’s post) to the defendant’s lawyer seeking information. Letter 1 asked for the name of the owner of the loan. The defendant (a residential mortgage loan servicer) responded to that letter by identifying both the servicer and the owner of the loan. Later, the borrower, following the entry of a state court foreclosure judgment and a denial of a loan modification request, sent Letter 2 asking for the “amount of the proposed monthly payment” under a requested loan modification that had been denied. That information was never provided. The third alleged QWR, Letter 3, surrounded an inquiry into payments the borrower made that had only been partially refunded, despite a request for a full refund. The servicer did not respond to that letter either.
Procedural history. The parties ultimately entered into a Home Affordable Modification Agreement that vacated the foreclosure judgment. Despite the settlement, the borrower filed suit against the servicer in federal court alleging, among other things, violations of the Real Estate Settlement Procedures Act (“RESPA”). The servicer filed a motion for summary judgment that led to Judge Young’s opinion, which is the subject of today’s post.
Borrowers may recover actual damages, including emotional distress, caused by a failure to comply with a Section 2605(e) qualified written request, per Section 2605(f)(1)(A).
12 U.S.C. 2605(e)(1)(B) defines a QWR. Case law has interpreted that provision to include “any reasonably stated written request for account information.” However, the duty to respond “does not arise with respect to all inquiries or complaints from borrowers to servicers.” The focus is on the servicing of the loan, not on the origination of the loan or modifications to the loan.
12 U.S.C. 2605(e)(1) and (2) deal with the timing of certain responses to certain QWRs. For example, Section (e)(2)(C)(i) sets a thirty-day deadline for certain servicing requests related to loan mods. See also 12 C.F.R. 1024.41 regarding timing for loss mitigation requests.
12 U.S.C. 2605(k)(1)(D) requires a servicer to provide within ten business days “the identity, address, and other relevant contact information about the owner or assignee of the loan” when requested by the borrower.
Holding. The Southern District of Indiana granted in part and denied in part the servicer’s summary judgment motion. The servicer prevailed on the Section 2605(k)(1)(D) and Section 2605(e)(2) claims about Letters 1 and 2. The Court denied summary judgment on the Section 2605(e)(1) claim for Letter 3.
Policy/rationale. As to Letter 1, the Court noted that the faulty timing of the response to the QWR did not cause actual damages. The distress alleged instead arose out of other factors in the borrower’s life. Letter 2 concerning loss mitigation options did not qualify as a QWR in the first place. Information related to a failed loan mod falls outside of RESPA. However, the Court concluded that Letter 3, a letter request seeking information about the servicer’s refund of payments made to stave off foreclosure, was a viable QWR because the letter involved the servicing of the loan. Since the servicer never responded to that letter, the claim regarding Letter 3 passed the summary judgment stage, although the opinion did not address the matter of damages.
Lesson. Careful compliance by mortgage servicers should lead to a favorable summary judgment rulings in RESPA cases brought by borrowers.
Case cite. Perron v. JP Morgan Chase, 845 F.3d 852 (7th Cir. 2017).
Legal issue. Whether the lender violated the Real Estate Settlement Procedures Act (RESPA), specifically the statutory duty to respond to a “qualified written request” from the borrower.
Vital facts. The lender erroneously paid the wrong insurer for homeowner’s coverage using funds from the borrowers’ escrow account. However, the borrowers switched insurers without informing the lender. Upon learning of the error, the lender paid the new insurer and informed the borrowers that the prior insurer would be sending a refund. The lender requested that the borrowers remit the refund to the lender so the depleted escrow account could be replenished, but the borrowers failed to do so. As a result, the lender adjusted the monthly mortgage payment to make up for the shortfall, but the borrowers failed to pay the higher amount and went into default. Instead of curing, the borrowers sent a RESPA “qualified written request” to the lender and demanded reimbursement of their escrow. The lender responded to the requests but still got sued.
Procedural history. The borrowers filed an action in federal court alleging that the RESPA responses were inadequate and that they had suffered 300k in damages. The district court granted summary judgment to the lender, and the borrowers appealed to the Seventh Circuit.
Generally, the statute “requires mortgage servicers to correct errors and disclose account information when a borrower sends a written request for information” known as a “qualified written request” or QWR.
RESPA gives borrowers a cause of action for actual damages incurred “as a result of” a failure to comply with the duties imposed on servicers of mortgage loans.
If borrowers prove the servicer engaged in a “pattern or practice of noncompliance,” then statutory damages of up to 2k are available. Also, successful plaintiffs may recover attorney fees.
Upon receipt of a valid QWR, RESPA requires the servicer to take the following action “if applicable”: (A) make appropriate corrections in the account, (B) after investigation, provide a written explanation or clarification explaining why the account is correct, (C) provide the information requested by the borrower or explain why it is unavailable and (D) provide the contact information of a servicer employee who can provide further assistance. 12 U.S.C. Sec 2605(e)(2).
Holding. The Seventh Circuit affirmed the district court’s summary judgment for the lender.
A common question we get from clients and out-of-state counsel is: when will the sheriff’s sale be? The answer depends upon a couple key variables: (1) the date the court enters the judgment and (2) the particular rules and customs of the local sheriff’s office.
Since Indiana is a judicial foreclosure state, there cannot be a foreclosure sale until after the court enters a judgment and decree. A plaintiff lender cannot praecipe for a sale until that occurs. From that point, depending upon how quickly the praecipe is filed, on average the sale will occur in 2 to 3 months.
The Marion County Civil Sheriff’s Office recently circulated the sale cut-off date list for 2018. Here it is. The noted “clerk’s cut-off” date is the deadline to praecipe for the sale in order to be slotted for the next sale date. Marion County, as with most if not all Indiana counties, have sheriff’s sales monthly, usually on a set day. For example, Marion County sales happen on the third Wednesday of the month.
Using the 2018 cut-off date list, here are a couple illustrations for the April 18, 2018 sale date. If judgment were entered on March 7th and if you were able to praecipe for sale the same day, the sale would be April 18th – 70 days. If, however, judgment were entered one day later, March 8th, then the sale would not be until May 16th – 98 days. Averaging those two figures results in 84 days. In most counties other than Marion, I would expect the post-judgment “time to sale” average to be slightly less.
So, the 2-3 month rule of thumb essentially stems from the notice requirement and the time to process all the paperwork. Many counties have far few sales than Indianapolis, which holds hundreds each month. Some counties have less stringent deadlines and may be able to hold a sale within forty-five days of the judgment date.
Do Borrowers Have A Right Of Redemption In Indiana?
I hope to post new material the week of October 23rd.

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