On April 30th, the FDIC issued a final rule that treats a mutual insurance holding company as an insurance company for purposes of Section 203(e) of the Dodd-Frank Act. The new rule clarifies that the liquidation and rehabilitation of a covered financial company that is a mutual insurance holding company will be conducted in the same manner as an insurance company.
On December 23rd, the Third Circuit addressed whether the automatic stay provisions of the Bankruptcy Code prevents a home mortgage lender from accounting for the pre-petition escrow shortage in its post-petition calculation of future monthly escrow payments. The Court concluded that when the terms of the loan allow the lender to escrow taxes and insurance payments, the lender has a pre-petition claim. In re Francisco Rodriguez.
On November 12th, the Third Circuit affirmed both bankruptcy and district court findings that, under the Rooker-Feldman doctrine, federal courts lacked subject matter jurisdiction over a claim seeking rescission of a mortgage filed in an adversarial action in federal bankruptcy court after a state court entered a default foreclosure order on that mortgage. The Third Circuit held further that the entry of summary judgment against plaintiff on her Truth in Lending Act claim was proper.
On February 1st, the Tenth Circuit held that Deutsche Bank failed to establish it was a "party of interest" entitled to relief from a bankruptcy petition's automatic stay. After Deutsche Bank's foreclosure of the Millers' home was stayed by the latter's bankruptcy petition, the bank obtained relief from the stay. On appeal, the Tenth Circuit reversed and remanded. The bank failed to provide the original note to the bankruptcy court and did not provide the original or a copy to the bankruptcy appellate panel.
On September 15th, the Sixth Circuit resolved a conflict among the district courts within the circuit. It held that a bank holding the undersecured home mortgage of a Chapter 13 debtor who is in arrears at the time of filing, is entitled to receive under the Chapter 13 bankruptcy plan fees and costs in the arrearage cure. Deutsche Bank National Trust Co. v. Tucker.
Sending the Debtors back to the drawing board after almost three years in bankruptcy, in a 139 page opinion, the Bankruptcy Court has for the second time denied confirmation of the Plan of Reorganization for Washington Mutual, Inc. (“WaMu”), which was the owner of the largest savings bank ever to be seized by the FDIC.
On July 16th, the OCC announced that it has approved the use of a shelf charter for the acquisition of a failed bank, allowing NAFH National Bank, Miami, Florida, to acquire two banks in Florida and one in South Carolina. This is the second instance in which a shelf charter was approved for use in such an acquisition. OCC Press Release.
On September 13th, the FDIC voted to approve a final rule to be issued jointly with the Federal Reserve Board that would implement Section 165(d) of the Dodd-Frank Act. That provision requires bank holding companies with assets of $50 billion or more and companies designated as systemic by the Financial Stability Oversight Council to report periodically to the FDIC and the Federal Reserve the company's plan for its rapid and orderly resolution in the event of material financial distress or failure. The Federal Reserve will consider whether to adopt the rule shortly.
On July 2nd, the Sixth Circuit affirmed a bankruptcy court's finding that, under Kentucky law, a bank did not perfect its security interest in an auto loan until that security interest was noted on the title. Because perfection did not occur within 20 days after the debtor received possession of the auto, Section 547(c)(3) of the Bankruptcy Code did not protect the bank's loan from avoidance as a preferential transfer. Branch Banking and Trust Co. v. Brock.
On September 7th, the FDIC announced the launch of a new program to encourage small investors and asset managers to partner with larger investors to participate in the FDIC's structured transaction sales for loans and other assets from failed banks. The Investor Match Program will help to facilitate partnerships in order to bring together sources of capital and expertise. Participants in the program will use a customized database to identify potential collaborations, which will be identified at the sole discretion of the participating firms.