COA: Summary judgment wrong in foreclosure suit

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A mortgagee’s compliance with federal mortgage servicing responsibilities is a condition precedent that can be raised as an affirmative defense to the foreclosure of a Federal Housing Administration insured loan, the Indiana Court of Appeals ruled today for the first time.

Florence R. Lacy-McKinney bought a home in South Bend with an FHA-insured mortgage. She later refinanced her loan with Taylor Bean & Whitaker Mortgage Corp., which was still an FHA-insured loan subject to federal statutes and regulations of the U.S. Department of Housing and Urban Development.

Lacy-McKinney eventually fell three months behind on her payments and the mortgagee filed to foreclose on her home. Lacy-McKinney raised several affirmative defenses in her response, including that Taylor-Bean refused partial mortgage payments and did not have a face-to-face meeting with her before filing for foreclosure, both of which violate HUD regulations for FHA- and HUD-insured mortgages.

The parties were unable to reach a settlement, and the trial court granted Taylor-Bean’s motion for summary judgment.

Addressing the issue for the first time in Florence R. Lacy-McKinney v. Taylor Bean and Whitaker Mortgage Corp., No. 71A03-0912-CV-587, the Court of Appeals needed to determine of what legal significance are the HUD regulations as to the right of a mortgagee to foreclose on a HUD-insured mortgage. After delving into the background of HUD-insured mortgages and relying on rulings from other states, including Bankers Life Co. v. Denton, 458 N.E.2d 203 (Ill. App. Ct. 1983), the appellate court concluded that HUD servicing responsibilities may be raised as an affirmative defense in foreclosure actions even though the regulations don’t create a private right of action.

“To hold that compliance with these regulations is not an affirmative defense, as Taylor-Bean suggests, would circumvent the public policy of HUD,” wrote Judge James Kirsch.

Lacy-McKinney admitted she entered into the note and mortgage and had fallen behind on her payments but claimed there were issues that precluded summary judgment. The judges agreed that there were genuine issues of material fact as to whether Taylor-Bean complied with the requirement for a face-to-face meeting or made an effort to arrange a meeting before she was three months behind on her payments. They reversed summary judgment and remanded for further proceedings because the trial court erred in granting summary judgment without first determining that Taylor-Bean had complied with Subpart C of HUD servicing responsibilities, the conditions precedent to foreclosure.


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  1. This is ridiculous. Most JDs not practicing law don't know squat to justify calling themselves a lawyer. Maybe they should try visiting the inside of a courtroom before they go around calling themselves lawyers. This kind of promotional BS just increases the volume of people with JDs that are underqualified thereby dragging all the rest of us down likewise.

  2. I think it is safe to say that those Hoosier's with the most confidence in the Indiana judicial system are those Hoosier's who have never had the displeasure of dealing with the Hoosier court system.

  3. I have an open CHINS case I failed a urine screen I have since got clean completed IOP classes now in after care passed home inspection my x sister in law has my children I still don't even have unsupervised when I have been clean for over 4 months my x sister wants to keep the lids for good n has my case working with her I just discovered n have proof that at one of my hearing dcs case worker stated in court to the judge that a screen was dirty which caused me not to have unsupervised this was at the beginning two weeks after my initial screen I thought the weed could have still been in my system was upset because they were suppose to check levels n see if it was going down since this was only a few weeks after initial instead they said dirty I recently requested all of my screens from redwood because I take prescriptions that will show up n I was having my doctor look at levels to verify that matched what I was prescripted because dcs case worker accused me of abuseing when I got my screens I found out that screen I took that dcs case worker stated in court to judge that caused me to not get granted unsupervised was actually negative what can I do about this this is a serious issue saying a parent failed a screen in court to judge when they didn't please advise

  4. I have a degree at law, recent MS in regulatory studies. Licensed in KS, admitted b4 S& 7th circuit, but not to Indiana bar due to political correctness. Blacklisted, nearly unemployable due to hostile state action. Big Idea: Headwinds can overcome, esp for those not within the contours of the bell curve, the Lego Movie happiness set forth above. That said, even without the blacklisting for holding ideas unacceptable to the Glorious State, I think the idea presented above that a law degree open many vistas other than being a galley slave to elitist lawyers is pretty much laughable. (Did the law professors of Indiana pay for this to be published?)

  5. Joe, you might want to do some reading on the fate of Hoosier whistleblowers before you get your expectations raised up.