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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. CCHP's real accomplishment is the 2015 law signed by Gov Pence that basically outlaws any annexation that is forced where a 65% majority of landowners in the affected area disagree. Regardless of whether HP wins or loses, the citizens of Indiana will not have another fiasco like this. The law Gov Pence signed is a direct result of this malgovernance.

  2. I gave tempparry guardship to a friend of my granddaughter in 2012. I went to prison. I had custody. My daughter went to prison to. We are out. My daughter gave me custody but can get her back. She was not order to give me custody . but now we want granddaughter back from friend. She's 14 now. What rights do we have

  3. This sure is not what most who value good governance consider the Rule of Law to entail: "In a letter dated March 2, which Brizzi forwarded to IBJ, the commission dismissed the grievance “on grounds that there is not reasonable cause to believe that you are guilty of misconduct.”" Yet two month later reasonable cause does exist? (Or is the commission forging ahead, the need for reasonable belief be damned? -- A seeming violation of the Rules of Profession Ethics on the part of the commission) Could the rule of law theory cause one to believe that an explanation is in order? Could it be that Hoosier attorneys live under Imperial Law (which is also a t-word that rhymes with infamy) in which the Platonic guardians can do no wrong and never owe the plebeian class any explanation for their powerful actions. (Might makes it right?) Could this be a case of politics directing the commission, as celebrated IU Mauer Professor (the late) Patrick Baude warned was happening 20 years ago in his controversial (whisteblowing) ethics lecture on a quite similar topic: http://www.repository.law.indiana.edu/cgi/viewcontent.cgi?article=1498&context=ilj

  4. I have a case presently pending cert review before the SCOTUS that reveals just how Indiana regulates the bar. I have been denied licensure for life for holding the wrong views and questioning the grand inquisitors as to their duties as to state and federal constitutional due process. True story: https://www.scribd.com/doc/299040839/2016Petitionforcert-to-SCOTUS Shorter, Amici brief serving to frame issue as misuse of govt licensure: https://www.scribd.com/doc/312841269/Thomas-More-Society-Amicus-Brown-v-Ind-Bd-of-Law-Examiners

  5. Here's an idea...how about we MORE heavily regulate the law schools to reduce the surplus of graduates, driving starting salaries up for those new grads, so that we can all pay our insane amount of student loans off in a reasonable amount of time and then be able to afford to do pro bono & low-fee work? I've got friends in other industries, radiology for example, and their schools accept a very limited number of students so there will never be a glut of new grads and everyone's pay stays high. For example, my radiologist friend's school accepted just six new students per year.

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