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Judges find mortgage company not culpably negligent

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In a dispute over which mortgage has priority in a foreclosure action, the Indiana Court of Appeals affirmed summary judgment for the senior mortgage holder. The judges found the doctrine of equitable subrogation applies.

Ronnie and Debora Brand obtained a mortgage for more than $107,000 with Meridian Group Mortgage Corp. and a second mortgage for a $25,000 home equity line of credit with Finance Center Federal Credit Union in 2002. The Brands later refinanced with First Republic Mortgage Corp., which paid off both Meridian Group and Finance Center. The First Republic mortgage was later assigned to GMAC Mortgage.

Finance Center never released the mortgage because the Brands did not send notice requesting release of the lien. The line of credit was left open and the company later advanced more money to the Brands. When GMAC attempted to foreclose on the real estate, Finance Center argued that its mortgage should be first in priority.

Both companies filed for summary judgment, and the trial court granted partial summary judgment to GMAC, finding it should have priority and Finance Center would be the junior lienholder.

Finance Center argued that GMAC isn’t entitled to first lien pursuant to the doctrine of equitable subrogation because GMAC was culpably negligent by not obtaining a release of the Finance Center mortgage. The appellate court cited JPMorgan Chase Bank v. Howell, 883 N.E.2d 106 (Ind. Ct. App. 2007), a case involving a similar dispute in which the judges found no culpable negligence in the refinancing lender’s failure to ensure that it had properly paid off the junior line of credit.

Any negligence in GMAC’s failure didn’t prejudice Finance Center because the Finance Center mortgage was always junior to the senior Meridian Group mortgage, which was fully satisfied with the loan proceeds from the GMAC refinancing, wrote Judge Nancy Vaidik in Finance Center Federal Credit Union v. Ronnie D. Brand, Debora J. Brand and GMAC Mortgage, LLC, No. 49A02-1111-MF-1089. Allowing GMAC to step into the shoes of the Meridian Group mortgage will leave Finance Center in the same junior position.

 

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  1. The is an unsigned editorial masquerading as a news story. Almost everyone quoted was biased in favor of letting all illegal immigrants remain in the U.S. (Ignoring that Obama deported 3.5 million in 8 years). For some reason Obama enforcing part of the immigration laws was O.K. but Trump enforcing additional parts is terrible. I have listed to press conferences and explanations of the Homeland Security memos and I gather from them that less than 1 million will be targeted for deportation, the "dreamers" will be left alone and illegals arriving in the last two years -- especially those arriving very recently -- will be subject to deportation but after the criminals. This will not substantially affect the GDP negatively, especially as it will take place over a number of years. I personally think this is a rational approach to the illegal immigration problem. It may cause Congress to finally pass new immigration laws rationalizing the whole immigration situation.

  2. Mr. Straw, I hope you prevail in the fight. Please show us fellow American's that there is a way to fight the corrupted justice system and make them an example that you and others will not be treated unfairly. I hope you the best and good luck....

  3. @ President Snow - Nah, why try to fix something that ain't broken??? You do make an excellent point. I am sure some Mickey or Minnie Mouse will take Ruckers seat, I wonder how his retirement planning is coming along???

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