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7th Circuit rules against homeowners on quiet title action

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A Hamilton County couple who went into default on their home mortgage loan had the dismissal of their action to quiet title and claims of negligence and unconscionability upheld Friday by the 7th Circuit Court of Appeals.

Phillip and Deborah Jackson received a $282,500 home mortgage refinancing loan with a 30-year fixed interest rate of 5.875 percent from Countrywide Home Loans. They used a mortgage broker to apply for the loan. They made payments on the loan for several years until the loan went into default in March 2010. Foreclosure proceedings were not initiated, but the Jacksons initiated a quiet title on their property in state court. They also alleged the mortgage defendants negligently evaluated their ability to repay the loan and that the loan contract was substantively and procedurally unconscionable.

The action was moved to federal court, where Judge William T. Lawrence dismissed the Jacksons’ claims.

In Phillip Jackson and Deborah Jackson v. Bank of America Corp., et al., 12-3338, the 7th Circuit held that the Jacksons can’t move forward on their negligence claims because they can’t show that the financial institutions actually owed them a duty. Without a duty, there is no cognizable negligence claim, Judge Michael Kanne wrote.

The couple was also unable to allege facts that would support that the loan contract was substantively unconscionable or procedural unconscionable, the judges ruled.

“There is nothing in the record to indicate that the Jacksons did not understand the terms of their loan, or that the mortgage process itself was somehow irregular. The contention that the Jacksons did not understand the potential consequences of defaulting on their loan is similarly unsupported,” Kanne wrote.

And although the Jacksons’ arguments regarding the action to quiet title were novel, the judges were unconvinced that they constitute a valid quiet title action under Indiana law.

“Although there is no pending foreclosure, the Jacksons attempt to construct a quiet title action out of two legal theories that have been used with limited success in other jurisdictions to forestall immediate foreclosure (but have not yet been raised, so far as we can tell, in Indiana under these precise circumstances): (1) that the bifurcation of the mortgage and the note (in order to package the latter into larger securities) prevents any party from claiming strong enough title to foreclose, and (2) that no party could produce the original note, which should be required to properly foreclose,” he continued.

“To the extent that these theories have legs (a question very much in dispute), they might protect a debtor from foreclosure by a particular party at a particular time. … They do not, however, ‘prove that [the plaintiff] was the owner of the land in controversy.’ As such, these theories are not sufficient to support a quiet title action in Indiana.”

 

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  1. Justice has finally been served. So glad that Dr. Ley can finally sleep peacefully at night knowing the truth has finally come to the surface.

  2. While this right is guaranteed by our Constitution, it has in recent years been hampered by insurance companies, i.e.; the practice of the plaintiff's own insurance company intervening in an action and filing a lien against any proceeds paid to their insured. In essence, causing an additional financial hurdle for a plaintiff to overcome at trial in terms of overall award. In a very real sense an injured party in exercise of their right to trial by jury may be the only party in a cause that would end up with zero compensation.

  3. Why in the world would someone need a person to correct a transcript when a realtime court reporter could provide them with a transcript (rough draft) immediately?

  4. This article proved very enlightening. Right ahead of sitting the LSAT for the first time, I felt a sense of relief that a score of 141 was admitted to an Indiana Law School and did well under unique circumstances. While my GPA is currently 3.91 I fear standardized testing and hope that I too will get a good enough grade for acceptance here at home. Thanks so much for this informative post.

  5. No, Ron Drake is not running against incumbent Larry Bucshon. That’s totally wrong; and destructively misleading to say anything like that. All political candidates, including me in the 8th district, are facing voters, not incumbents. You should not firewall away any of voters’ options. We need them all now more than ever. Right? Y’all have for decades given the Ds and Rs free 24/7/365 coverage of taxpayer-supported promotion at the expense of all alternatives. That’s plenty of head-start, money-in-the-pocket advantage for parties and people that don’t need any more free immunities, powers, privileges and money denied all others. Now it’s time to play fair and let voters know that there are, in fact, options. Much, much better, and not-corrupt options. Liberty or Bust! Andy Horning Libertarian for IN08 USA House of Representatives Freedom, Indiana

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