PENNSYLVANIA CASE LAW UPDATE
Frequently, borrowers file for bankruptcy at the 11th hour to halt foreclosure sales. Once a petition for bankruptcy relief has been filed, secured creditors must cease their collection efforts to avoid violating the automatic stay. However, the automatic stay terminates upon a debtor’s dismissal and closure of the bankruptcy case. A Pennsylvania bankruptcy court recently ruled that if a foreclosure sale occurs between the time when a bankruptcy case is dismissed and when it is reinstated, the foreclosure sale is not void and does not violate the automatic stay.
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In In re Parker, the debtor filed a petition for bankruptcy relief to prevent a foreclosure sale of her residence. Notably, the debtor failed to file any of the required documents at the time she filed her bare-bones petition. This was the debtor’s fourth bankruptcy filing, and as such, she was familiar with the necessary documents that must be completed and filed in Chapter 13 cases.

The debtor timely filed some, but not all, of the missing documents, and the bankruptcy court thus entered an order dismissing her case. Under section 362(c)(2)(B) of the Bankruptcy Code, at the time a case is dismissed the automatic stay is terminated.

FLORIDA CASE LAW UPDATES
MTGLQ INVESTORS, L.P. V. MERRILL, 1D19-2682 (Fla. 1st DCA Jan. 25, 2021)
Merrill, the borrower, gave her lender a purchase-money mortgage and note in June 2007. In 2013, JPMorgan Chase Bank (“Chase”) filed a foreclosure action alleging that Fannie Mae owned the note, and that Chase was authorized to bring the action. Chase filed the original note and mortgage in 2013. The original note had an allonge with a blank endorsement. In 2014, Chase moved to substitute Fannie Mae as plaintiff. The borrower did not object. In 2016, Fannie Mae recorded an assignment of the mortgage and note to MTGLQ and also executed a power of attorney to MTGLQ, giving it “full power and authority” to take any action that FNMA could take with respect to “mortgage loans, deeds of trust, promissory notes and allonges.” MTGLQ moved to substitute itself as plaintiff; the borrower did not object. In 2018, the trial court scheduled the trial. MTGLQ amended its witness list five days before trial. Although the borrower had not deposed the prior witness, the trial court dismissed the case with prejudice due to the late amendment.

Apparently, the appellate court had previously dismissed MTGLQ’s appeal of the trial court’s order dismissing the foreclosure suit. In 2019, MTGLQ moved to retrieve the original loan documents from the court file, and then amended its motion, citing Fla. R. Jud. P. 2.430(h) that provides ongoing authority to release exhibits and records that are the property of the person or party placing the items in the court records. MTGLQ argued it was entitled to the original note and mortgage as the substituted plaintiff and the assignment (of both the note and mortgage) from Fannie Mae. The borrower argued MTGLQ’s right to enforce did not survive the appellate dismissal because MTGLQ was not the original plaintiff and could not establish a chain of ownership, and a substituted plaintiff does not necessarily own the note or have standing to enforce it.

The trial court denied MTGLQ’s amended motion to retrieve the original loan documents. MTGLQ appealed.

FLORIDA CASE LAW UPDATE
US BANK N.A., AS TRUSTEE V. GARRISON, No. 05-2018-CA-017475 (Fla. 18th Jud. Cir. Jan. 16, 2020)
In a foreclosure suit, the borrower asserted a counterclaim against the lender under the Florida Consumer Collections Practices Act (“FCCPA”), based on the monthly mortgage statement, the included payment coupon and the blank mailing envelope included with the monthly mortgage statements. The trial court granted the lender’s motion to dismiss the counterclaim with prejudice. The court ruled: (1) the monthly mortgage statements were not debt collection activity as that term is understood and defined by the FCCPA [note: the FCCPA does not define the term debt collection activity]; (2)  the payment coupons included with the monthly mortgage statements are part of the CFPB’s approved H-30(B) and without any material deviations, are not debt collection activity; and (3) the blank mailing envelope included with the monthly mortgage statements are not debt collection activity.

NEW YORK CASE LAW UPDATE
U.S. Bank Trust, N.A v Moomey-Stevens, ___AD3d___, 2020 NY Slip Op 07440 [3d Dept 2020]
On appeal, the Appellate Division affirmed the Supreme Court’s post-trial decision in a foreclosure action, finding that the lender had proven its standing to bring the action as it had physical possession of original note at time the action was commenced as loan servicer's electronic inventory report, together with testimony from default servicing officer, showed that plaintiff came into physical possession of the note in 2016 before commencement of the action in 2017.

NEW YORK CASE LAW UPDATE
Aspen Shackleton III, LLC v Gordon, 189 AD3d 967 [2d Dept 2020]
On an appeal brought by an HOA seeking review of a summary judgment order issued in a foreclosure action on a modified mortgage, the Appellate Division affirmed the Supreme Court’s granting of summary judgment in favor of the lender, finding that HOA’s continuing lien for unpaid common charges created by its governing Declaration of Covenants, Restrictions, Easements, Charges and Liens, which was recorded prior to the mortgage, “merely provided for a potential lien” for unpaid common charges incurred by the borrower, and thus, gave notice “only of a potential claim” that did not have priority over the lender’s mortgage.

NEW YORK CASE LAW UPDATE
Wells Fargo Bank, N.A. v Khan, 188 AD3d 952 [2d Dept 2020]
In a rare reversal of a trial court’s denial of a reargument motion on appeal, the Appellate Division reversed the Supreme Court’s denial of the lender’s reargument motion for summary judgment in a foreclosure action, finding that the lender had established its standing to commence the action “by attaching a copy of the note, indorsed in blank, to the complaint”, and that the borrowers’ allegations of fraud “failed to raise a triable issue of fact”.

MARYLAND CASE LAW UPDATE
The Maryland “fast track” option for Vacant and Abandoned Properties would require our clients to file a petition pursuant to 7-105.14(f)(4) asserting that the property is vacant and abandoned. The process would look like this:

1. Petition filed.  The petition can be filed under various circumstances if our clients can establish sufficient facts to assert that the property is vacant and abandoned per the below criteria. 
2. Then the borrower has 20 days to respond/oppose the petition. 
3. Then the court must grant the petition, if unopposed, quickly (there is no description for the process by which a challenge will be heard and resolved, likely by hearing that the court will set). 
4. Once the petition is granted, a Line to Docket Foreclosure may proceed, which must include this notice.

NEW YORK CASE LAW UPDATE
AXIOM Bank v Dutan, ___AD3d___, 2021 NY Slip Op 00141 [2d Dept 2021]
In a foreclosure action, the Appellate Division affirmed on appeal the judgment of foreclosure and sale, finding that the lender established its strict compliance with RPAPL § 1304, as well as its substantial compliance with paragraph 22 of consolidated mortgage, which required service of specified default notice as condition precedent to acceleration of loan, and further finding that the borrowers’ bare denials of receipt were insufficient to establish their entitlement to summary judgment.

FLORIDA CASE LAW UPDATE
NAT'L MED. IMAGING, LLC V. LYON FIN. SERVS., 3D20-730 (Fla. 3rd DCA Jan. 13, 2021)The Third District receded from its prior decision which held that the bankruptcy automatic stay provisions are inapplicable in an appellate court where the debtor, who is the defendant in the trial court below and has filed for federal bankruptcy protection, is the appellant.