Justia U.S. 6th Circuit Court of Appeals Opinion Summaries

Chambers purchased a condominium in Novi, Michigan for $608,294.00, with a mortgage loan of $583,294.00, and a second mortgage of $166,635.00. The mortgages were assigned to HSBC. Chambers defaulted on the first mortgage, in 2008. The second mortgage was discharged in 2009. HSBC began non-judicial foreclosure proceedings by publishing a notice. In January, 2013, the Oakland County Deputy Sheriff sold Chambers’ condo to HSBC for $744,734.33. In September 2013, Chambers sued, demanding that the sale be voided because HSBC did not comply with Michigan law governing foreclosure by advertisement in failing to mail her written notices containing information specified in the statute including notification of her right to request loan modification; that all defendants “acting in concert … willfully, knowingly and purposefully failed to comply with the mandatory notice provisions” in Michigan law, and committed fraud in doing so; and that multiple conveyances of the mortgage were flawed, rendering HSBC legally incapable of foreclosing on the property. The Sixth Circuit affirmed dismissal. Chambers had the opportunity during the redemption period following the foreclosure sale to request that a court convert the foreclosure by advertisement into a judicial foreclosure. She failed to act during the requisite time period and to request the exclusive remedy the court could grant. View "Chambers v. HSBC Bank USA, N.A." on Justia Law

Kentucky’s statutes require that assignment of a mortgage must be recorded within 30 days. Plaintiffs, landowners with mortgages, argued that, for purposes of that requirement, a transfer of a promissory note is an assignment of a mortgage securing the note, and must be recorded. The issue arose because of the use of the Mortgage Electronic Registration System (MERS), a private company that operates a national electronic registry to track servicing rights and ownership of mortgage loans. When a home is purchased, the lender obtains promissory note and a mortgage naming MERS as the mortgagee (as nominee for the lender and its successors). The borrower assigns his interest in the property to MERS, and the mortgage is recorded in local records with MERS as the named mortgagee. When the note is sold in the secondary mortgage market, the MERS database tracks that transfer. MERS remains the mortgagee of record, avoiding recording and other transfer fees and continues to act as an agent for the new owner of the note. The district court agreed with plaintiffs. The Sixth Circuit reversed. The text, structure, and purposes of Kentucky’s recording statutes (KRS 382.365(5)) indicate that transfer of a promissory note is not, itself, an assignment of a mortgage securing the note. View "Higgins v. BAC Home Loans Servicing, LP" on Justia Law

The Yangs listed their building for sale. In February 2011 the restaurant leasing the property closed. The Yangs never sold the building or found another tenant. They continued to pay property taxes. The building was vandalized and started to fail. In October 2011, city officials posted an abandonment notice and mailed a copy to the owner listed in its files. The notice went to the abandoned building and named the previous owner. Nine months later, the city posted a “repair/demolish” notice and sent notices by certified mailing to the property’s address; the notices were returned. After a title search, which identified the Yangs, the city sent certified mail notices to their home in September 2012. Having no response, the city scheduled a November 1 hearing about demotion and sent the Yangs notice by regular mail, with a copy to their realtor. The post office returned as “unclaimed” the certified mailing. The non-certified mailing was not returned. The Yangs did not appear. Demolition was approved. The city mailed another notice to the home address, but got no response. In January 2013, the city razed the building and mailed a $22,500 bill. The Yings claim to remember getting mail that said something about fixing up the building but ignoring it and that they did not receive notice concerning demolition. The Yangs sued under 42 U.S.C. 1983. The district court granted the city summary judgment. The Sixth Circuit affirmed, holding that the city provided all of the notice that was reasonably due. View "Yang v. City of Wyoming" on Justia Law

In 1948, the United States and Ohio entered into a cost-sharing agreement to construct and maintain the Tom Jenkins Dam and Burr Oak Reservoir to control flooding in southeast Ohio’s Hocking River Basin. The U.S. Army Corps of Engineers determined that the Project required acquisition of property interests under and surrounding the dam, including subsurface mineral rights. Those interests were acquired and the dam was built. In 2010, Ohio entered into leases that granted Buckingham, a coal company, rights to construct a corridor beneath Project lands to connect non-Project parcels that Buckingham already owned and to sell coal extracted in the process. The United States unsuccessfully sought a temporary restraining order. The district court determined that the Project would not be placed at risk by the leases. The United States then unsuccessfully sought a declaratory judgment that the cost-sharing agreement preclude Ohio (or any third party authorized by Ohio) from conducting mining activity in Project lands without the Corps’ prior approval. The Sixth Circuit reversed. Ohio was required to acquire land “necessary” for the Project, including “coal in the lands lying below elevation 750,” so that the United States would not have to litigate to protect the Project or to alter operations to avoid litigation. The Agreement did not grant Ohio a unilateral right to sell, lease, or otherwise dispose of those same rights. View "United States v. State of Ohio" on Justia Law

Plaintiffs obtained a home loan and granted a mortgage that was eventually assigned to Bank of America (BOA). Plaintiffs defaulted in 2007. In 2011, plaintiffs received a letter explaining the right to seek a loan modification. Plaintiffs sought assistance from NMCA; met with BOA’s counsel; provided information and forms prepared with help from NMCA; and were offered reduced payments for a three-month trial period. If all trial period payments were timely, the loan would be permanently modified. Plaintiffs allege that they made the three payments, but did not receive any further information, and that BOA returned two payments. BOA offered plaintiffs a permanent loan modification, instructing plaintiffs to execute and return a loan modification agreement. Plaintiffs do not allege that they returned the agreement. BOA never received the documents. BOA sent a letter informing them that because they were in default and had not accepted the modification agreement, a nonjudicial foreclosure would proceed. Notice was published. The property was sold at a sheriff’s sale. BOA purchased the property, and executed a quitclaim deed to Federal National Mortgage Association, which filed a possession action after the redemption period expired. Six months later, plaintiffs sued, claiming Quiet Title; violations of due process rights; and illegal/improper foreclosure and sheriff’s sale. The district court dismissed all claims. The Sixth Circuit affirmed, holding that the Michigan foreclosure procedure does not violate due process. View "Garcia v. Fed. Nat'l Mortg. Ass'n" on Justia Law

The Borrower defaulted on a nonrecourse Commercial Mortgage-Backed Securities (CMBS) loan secured by property located in Detroit. CMBS loans are packaged as a trust to attract investors; in return for nonrecourse liability, CMBA borrowers promise to refrain from certain financial behavior likely to increase the risk of default and bankruptcy; the loan at issue included a solvency clause. Michigan’s 2012 Nonrecourse Mortgage Loan Act applies retroactively to render solvency covenants in nonrecourse loans unenforceable, declaring them “an unfair and deceptive business practice . . . against public policy [that] should not be enforced.” The lender foreclosed. Purchaser bought the property at auction with a winning bid of $756,000, and, standing in the lender’s shoes and citing the solvency clause, sued Borrower and its guarantor to collect a $6 million deficiency. The district court granted summary judgment in favor of Borrower. The Sixth Circuit affirmed, agreeing that that the NMLA: rendered the solvency covenant in Borrower’s CMBS loan unenforceable; violated neither the Contract nor Due Process Clauses of the United States and Michigan Constitutions; and comported with Michigan’s constitutional provision mandating the separation of governmental powers. View "Borman, LLC v. 18718 Borman, LLC" on Justia Law

In 2006, Thompson signed a $354,800 mortgage note with AME as the lender. Several sections of the note and deed of trust noted AME’s intent to transfer the note. Its signature page contains a signed, undated stamp memorializing AME’s transfer to Countrywide and another signed, undated endorsement from Countrywide to blank. BOA purchased Countrywide and has the note. In 2012, BOA offered to short-sell her house in lieu of foreclosure. Thompson requested modification of her repayment terms under the HAMP program (Emergency Economic Stabilization Act, 12 U.S.C. 5201), that gives lenders incentives to offer modifications to borrowers with a payment-to-income ratio over 31%. Thompson claims that she complied with numerous document requests. BOA never granted her application. She sued BOA, Mortgage Electronic Registration Systems, and unidentified persons she believes to be the note’s true owners, claiming: that BOA falsely induced her to sign the mortgage by pretending it was an actual lender; that her title is clouded by the note’s transfer; and that BOA fraudulently induced her to seek modification, knowing it lacked authority to modify her terms or intending to drive her into foreclosure. The district court dismissed for failure to comply with pleading standards. The Sixth Circuit affirmed. View "Thompson v. Bank of Am., N.A." on Justia Law

In 2004, the plaintiffs’ Rockvale, Tennessee home burned down. They replaced it with a 2180-square-foot, “triple-wide” manufactured home purchased from the defendant for $160,230. Defendant was responsible for “normal delivery and installation” on the plaintiffs’ land and warranted that, “[f]or new homes, installation at the initial homesite will be completed in accordance with applicable governmental requirements.” Defendant delivered and installed the home in March 2005, but only one member of the installation crew was identified. He was not licensed to install manufactured homes as required by T.C. 68-126-404(a). Plaintiffs immediately began noticing defects that suggested the home was not level when installed and notified the defendant before they closed the purchase. Defendant assured plaintiffs that it would repair and level the home. After several years of inspections and repair efforts, defendant never levelled or repaired the home to the plaintiffs’ satisfaction. Plaintiffs sued, claiming breach of contract and federal breach of warranty under15 U.S.C.A. 2304, the Magnuson-Moss Warranty Act, “and/or other applicable law.” The district court held that an arbitration clause was invalid and awarded $39,238.29. The Sixth Circuit remanded, concluding that federal jurisdiction did not exist because the home is not a “consumer product” under the Magnuson-Moss Act. View "Bennett v. CMH Homes, Inc." on Justia Law

The Hollis family, with five children, lived in a house in Franklin, Tennessee. The two youngest children have Down Syndrome and developmental disabilities. The parents wanted to attach a sunroom to their house to permit the children to enjoy the therapeutic benefits of sunlight, as recommended by a pediatric cardiologist who treated the children. The house is in a residential subdivision, which is subject to restrictive covenants. The homeowners association rejected several applications for approval to build the addition. The Hollises sued under the Fair Housing Act, 42 U.S.C. 3604, individually and as “next friends” of the children. The district court dismissed their personal-capacity claims for want of standing and then, applying the McDonnell Douglas burden-shifting test to the claim under the reasonable-modification provision of the Act, awarded summary judgment to the association on the “next friend” claim. The Sixth Circuit vacated and remanded. Intent is irrelevant in reasonable modification claims: a reasonable modification plaintiff must prove the reasonableness and necessity of the requested modification; that she suffers from a disability; that she requested an accommodation or modification; that the defendant refused to make the accommodation or to permit the modification; and that the defendant knew or should have known of the disability at the time.View "Hollis v. Chestnut Bend Homeowners Ass'n" on Justia Law

Circuit affirmed. When real estate taxes are not paid, a tax lien attaches to the property, annually, including interest, penalties, and fees accrued until paid, O.R.C. 323.11. Summit and other Ohio counties sell tax lien certificates that entitle the certificate holder to the first lien on the property. Property owners may redeem and remove the lien by paying the holder the purchase price plus interest, penalties, and costs, O.R.C. 5721.32. The certificate holder may initiate foreclosure proceedings after one year. Plymouth Park purchased Certificate 1, showing a purchase price of $4,083.73 with a negotiated interest rate of 0.25%, and Certificate 2, showing a purchase price of $2,045.44 with a negotiated interest rate of 18.00%. Summit County filed a foreclosure complaint following a request by Plymouth Park. The complaint stated that “as provided by Section 5721.38(b) of the Ohio Revised Code” the “redemption price” calculated was $10,585.82. A month later, the Debtors filed their Chapter 13 plan and petition; they did not file any notice to “redeem” their property during the bankruptcy action. The Chapter 13 payment plan (11 U.S.C. 1321) proposed to pay the interest rates listed on the certificates. , Plymouth Park filed a proof of claim based on both certificates for $10,521.46, including $2,120.00 in fees and the principal balance of $7,781.19 plus 18% interest. The Bankruptcy Court agreed that Plymouth Park’s claim was a tax claim under 11 U.S.C. 511 and that state law governed the interest rate, but rejected a claim that the 18% statutory rate, rather than the negotiated rate, should apply. The Bankruptcy Appellate Panel and Sixth View "Plymouth Park Tax Servs, LLC v. Bowers" on Justia Law