Do Lenders Have A Right To Credit Bid On Their Collateral?
Last month, the U.S. Supreme Court agreed to hear another bankruptcy case and this one could have a profound effect on a lender’s bidding rights when its collateral is up for sale. RadLAX Gateway Hotel, LLC v. Amalgamated Bank, No. 11-166, cert. granted Dec. 12, 2011. In the lower courts, the debtor sought approval of a bankruptcy plan which would have sold the lender’s collateral at auction without allowing the bank to credit bid. The Seventh Circuit Court of Appeals rejected that approach, saying that secured creditors had a right to acquire the property by bidding with their liens. Read More ›
The Consumer Financial Protection Bureau Is Now Accepting Mortgage Related Consumer Complaints
The Consumer Financial Protection Bureau (“CFPB”), was established by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, an overhaul of the nation's financial regulations, and is tasked with defending consumer rights with banks, mortgage companies, the credit-card industry, payday lenders and others. On January 5, 2012, the CFPB announced through a post on its blog that its system for processing consumer mortgage complaints has been activated. According to the announcement, the CFPB is accepting mortgage complaints from consumers who have experienced difficulties in the housing market, including problems related to mortgage documents, mortgage servicers, and foreclosure. Financial institutions that receive consumer complaints from the CFPB will have only 15 days to provide a response to the CFPB and institutions are expected to resolve and close all but the most complicated complaints within 60 days. If the consumer submitting the complaint is unsatisfied with the resolution of their complaint, they can dispute the resolution with the CFPB. Read More ›
American Law Institute Attempts To Clarify Law Concerning Transfer And Enforcement Of Mortgage Notes
The current “Mortgage Crisis” has prompted many borrowers to challenge the right of a lender or mortgage servicer to bring a foreclosure action, asserting that errors in the process of selling or assigning the note and/or mortgage make it difficult or impossible to enforce those documents. Those contests have often been couched in terms of lack of standing, inability to prove ownership of mortgage documents or invalid/undocumented assignment of those documents. Both counsel and courts have sometimes evidenced uncertainty concerning the applicable law and its impact on these issues. On November 14, 2011, the American Law Institute published a report entitled “Application of the Uniform Commercial Code to Selected Issues Related to Mortgage Notes” which attempts to clarify some of the frequently encountered questions in this area. It can be found at www.uniformlaws.org/shared/committees_materials/PEBUCC/PEB_Report_111411.pdf. Read More ›
Indiana Court Of Appeals Invalidates Arbitration Agreement That Selected NAF As Arbitrator On The Ground It Is Impossible To Perform
In Geneva-Roth Capital, Inc. v. Edwards, the Indiana Court of Appeals considered an issue of first impression in Indiana: when the parties to an arbitration agreement select a specific arbitrator, and that arbitrator is no longer available, does the agreement fail for impossibility? Cause No. 49A02–1101–PL–43, 2011 WL 5566216 (Ind. Ct. App. Nov. 16, 2011). In that case, the defendant lender extended a small, short-term loan to the plaintiff borrower. The loan agreement included an arbitration provision, which provided: Read More ›
Enforcement Of A "Floating Forum Selection Clause" Continues To Be Questionable In Ohio
The Lessor of equipment is in New Jersey; the Lessees (hundreds of them) are all over the east coast. The Lessor has arranged financing by entering into an agreement with an Ohio bank or other funding source. All of the leases provide that the Lessees consent to jurisdiction in the state where the Lessor is located (New Jersey) or, if the lease is assigned to facilitate financing, where the assignee is located (Ohio). The Lessees are all commercial entities, not consumers. Three months later the Ohio bank provides funding and becomes the assignee. After a Lessee defaults and the Bank sues to recover damages or the equipment, is the jurisdictional consent in the forum selection clause effective? Don’t count on it! Read More ›
Sixth Circuit Avoids Bank's Lien Interest In Manufactured Home
The case of In re Dickson, 655 F.3d 585 (6th Cir. 2011) centered on the status of the debtor’s manufactured home under Kentucky law. In Kentucky, a manufactured home is considered personal property. As such, in order for a lien to be effective, it must be noted on the certificate of title. A manufactured home may be converted to real property, however, if the owner files an affidavit that states it is permanently affixed to real estate and then surrenders title. Read More ›
Kentucky Law Regarding Trade Fixtures - More Than Meets The Eye
Lenders and other creditors often require security interests in the property owned by the borrower or debtor. But how often does the lender examine whether the property is actually a fixture and therefore realty subject to filing as a lien in the real estate records, or a trade fixture, and therefore personal property with the lien recorded as a U.C.C.-1 with the Secretary of State. If the lender or other creditor actually examined the property, how would it determine whether the property is realty or personal property. The size and weight of the property or the “annexation” of the equipment to the real estate with bolts or other methods is not dispositive–but rather the intended use of the property, with the primary test whether the property is used in the course of the tenant’s business for the tenant’s benefit. Thus, a creditor or lender will likely need to know the business use of the property and whether any contract between the tenant and the landlord seeks to identify what would otherwise be deemed personal property as a fixture and therefore realty. Read More ›
Money Laundering And Its Implication As To Financial Institutions
Are lawyers and other professionals going to be subject to money laundering regulations? Will lawyers have to submit suspicious activity reports? Suspicious transaction reports? Will there be an international registry of all trusts which would include the names of the settlor, trustee and beneficiaries? As recently as April of 2010, France advocated for such an international registry. Read More ›
Improperly Executed But Properly Recorded Mortgage Isn't A Lien
The mortgage was not properly executed because the borrower / mortgagor’s signature was not notarized as required by Ohio Revised Code Section 5301.01. The mortgage was appropriately recorded despite the deficiency. With record notice of the current mortgage (and possibly actual notice too), a second lender advanced money to the same borrower and recorded a properly executed mortgage. The latter mortgage was recorded about two years after the first, improperly executed, mortgage was recorded. Read More ›
Ohio Court Refuses To Permit An Auctioneer, Rather Than A Sheriff, To Sell Property Following Foreclosure
In The Huntington National Bank v. Conservatory Associates Limited Liability Copmany, et al. (2011), Medina Co. No. 10CA0096-M, 2011-Ohio-3249 (Jun. 30, 2011) the Court of Appeals affirmed the granting of summary judgment on a foreclosure complaint to Plaintiff Huntington National Bank (“the Bank”), but reversed the trial court’s order appointing an auctioneer to sell the property rather than a sheriff. Read More ›
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Attorney Spotlight
William T. Repasky practices with the Litigation Department at Frost Brown Todd. He focuses on lending and commercial services; banking litigation and financial institutions.