Supreme Court says cities can sue banks over predatory loans

WASHINGTON — The Supreme Court ruled Monday that cities can sue banks for discriminatory mortgage lending practices, but they must prove that predatory loans led to damages such as lost tax revenue and higher spending on municipal services.

The decision was a partial victory both for Miami, which sought standing to sue banks under the Fair Housing Act, and for Bank of America and Wells Fargo, which argued that the city's damages were too many steps removed from the original loans. The dispute now returns to lower courts for further action.

The 5-3 ruling was written by Justice Stephen Breyer and backed by the court's liberal justices and Chief Justice John Roberts. Three justices — Clarence Thomas, Anthony Kennedy and Samuel Alito — argued that the city had no right to sue under the landmark 1968 civil rights law in the first place. Newly confirmed Justice Neil Gorsuch did not take part in the decision.

Click HERE for the full story.

Creditors’ And Debtors’ Rights

Plaintiff moved for summary judgment, appointment of a referee to compute and a default judgment against non-appearing defendant. The original balloon note and mortgage was between Home Funds Direct and defendants, who allegedly defaulted by failing to make payments. US Bank Trust (USBT) moved for summary judgment, while defendants argued USBT did not have standing claiming MERS was never authorized by the original lender to assign the note and mortgage to USBT. They alleged the note was in the possession of a "custodian,"—Wells Fargo Bank, not USBT. The court found USBT failed to meet its burden of proving standing, finding it failed to prima facie establish it was in possession of the note as Wells Fargo continued to possess the original. Also, while USBT may establish standing by showing the note was assigned to them, it failed to succeed as there was no endorsement to MERS on the note giving it authority to assign. As there was no evidence indicating MERS had a right to assign the note, as MERS could not transfer what it did not hold, no factual details of a physical delivery were provided and USBT failed to establish it had physical possession at the time the action was commenced. USBT's motion was denied, and the case was dismissed.

The full text decision and summary can be found HERE

High Court Says Fannie Mae Has Limited Path To Fed. Court

Law360, Minneapolis (January 18, 2017, 10:55 AM EST) -- The nation's high court on Wednesday reversed a Ninth Circuit ruling that found Fannie Mae can remove state suits to federal court, striking a blow to Fannie, which has argued that its charter allows it to bring suits to federal courts.

Fannie Mae, which is currently involved in tens of thousands of cases in state courts, has lost its U.S. Supreme Court battle to move those suits into federal court. 

The full article can be found HERE {Law 360 is subscription service}

ATTEMPT TO DEMONSTRATE STANDING FAILED BECAUSE THE SUBMITTED AFFIDAVIT DID NOT MEET THE REQUIREMENTS OF THE BUSINESS RECORDS EXCEPTION TO THE HEARSAY RULE; AFFIDAVIT SUBMITTED IN REPLY PAPERS CANNOT BE CONSIDERED.

The Second Department determined plaintiff loan service did not demonstrate standing to bring this foreclosure action. The affidavit submitted by the plaintiff did not meet the requirements of the business records exception to the hearsay rule. An affidavit submitted with the reply papers could not be considered: “…[T]he plaintiff relied on the affidavit of Jaclyn Holloway, an assistant secretary of Nationstar Mortgage, LLC (hereinafter Nationstar). Holloway alleged that, after the action was commenced, the plaintiff delivered the note to NationStar. She alleged that, ‘pursuant to the business records of [the plaintiff],’ the plaintiff had physical possession of the note when it commenced the action. However, the plaintiff failed to demonstrate the admissibility of the records relied upon by Holloway under the business records exception to the hearsay rule (see CPLR 4518[a]) since Holloway did not attest that she was personally familiar with the record-keeping practices and procedures of the plaintiff ... . Consequently, Holloway’s allegations based on those records were inadmissible ... , and, therefore, insufficient to meet the plaintiff’s prima facie burden to establish its standing ... . The plaintiff could not rely on the affidavit of its vice president to meet its prima facie burden since the affidavit was improperly submitted for the first time in its reply papers ...”. . Aurora Loan Servs., LLC v. Baritz, 2016 N.Y. Slip Op. 07154, 2nd Dept 11-2-16

A.G. Schneiderman Announces Nearly $13 Million In Awards For Cities To Combat Vacant And Zombie Homes

A.G. Schneiderman will forward approximately $350,000 to NYC to help combat "Zombie Homes". These grants are awarded under the Zombie Remediation and Prevention Initiative. Under the passage of the Abandoned Property Neighborhood Relief Act in June 2016, banks are now required to register any properties abandoned by their customers with the Department of Financial services. If you've ever lived next to an abandoned property you'll surely appreciate this act. Unfortunately there are now approximately 16,000 Zombie homes across New York State. So, odds are you've either seen them in your neighborhood or unfortunately live next door to one. 

http://www.ag.ny.gov/press-release/ag-schneiderman-announces-nearly-13-million-awards-cities-combat-vacant-and-zombie