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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. Please I need help with my class action lawsuits, im currently in pro-se and im having hard time findiNG A LAWYER TO ASSIST ME

  2. Access to the court (judiciary branch of government) is the REAL problem, NOT necessarily lack of access to an attorney. Unfortunately, I've lived in a legal and financial hell for the past six years due to a divorce (where I was, supposedly, represented by an attorney) in which I was defrauded of settlement and the other party (and helpers) enriched through the fraud. When I attempted to introduce evidence and testify (pro se) in a foreclosure/eviction, I was silenced (apparently on procedural grounds, as research I've done since indicates). I was thrown out of a residence which was to be sold, by a judge who refused to allow me to speak in (the supposedly "informal") small claims court where the eviction proceeding (by ex-brother-in-law) was held. Six years and I can't even get back on solid or stable ground ... having bank account seized twice, unlawfully ... and now, for the past year, being dragged into court - again, contrary to law and appellate decisions - by former attorney, who is trying to force payment from exempt funds. Friday will mark fifth appearance. Hopefully, I'll be allowed to speak. The situation I find myself in shouldn't even be possible, much less dragging out with no end in sight, for years. I've done nothing wrong, but am watching a lot of wrong being accomplished under court jurisdiction; only because I was married to someone who wanted and was granted a divorce (but was not willing to assume the responsibilities that come with granting the divorce). In fact, the recalcitrant party was enriched by well over $100k, although it was necessarily split with other actors. Pro bono help? It's a nice dream ... but that's all it is, for too many. Meanwhile, injustice marches on.

  3. Both sites mentioned in the article appear to be nonfunctional to date (March 28, 2017). http://indianalegalanswers.org/ returns a message stating the "server is taking too long to respond" and http://www.abafreelegalasnswers.org/ "can't find the server". Although this does not surprise me, it is disheartening to know that access to the judicial branch of government remains out of reach for too many citizens (for procedural rather than meritorious reasons) of Indiana. Any updates regarding this story?

  4. I've been denied I appeal court date took a year my court date was Nov 9,2016 and have not received a answer yet

  5. Warsaw indiana dcs lying on our case. We already proved that in our first and most recent court appearance i need people to contact me who have evidence of dcs malpractice please email or facebook nathaniel hollett thank you

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