On March 8, the Bankruptcy Court for the Southern District of New York concluded a lengthy “claims estimation” trial to determine the appropriate final settlement price for a resolution of lawsuits filed on behalf of investors in residential mortgage-backed securities (RMBS) created by Lehman Brothers Holdings prior to its bankruptcy in September 2008. The judge determined that the final settlement value of this particular set of claims was $2.38 billion – down from the $37 billion initially demanded, and the $11.4 billion sought by the plaintiffs in this claims estimation trial.
In a noteworthy decision, the Bankruptcy Appellate Panel for the Ninth Circuit overturned a dismissal of a bankruptcy case, which the lower court had dismissed based on its belief that the landlord debtor was receiving rental income from a marijuana dispensary. The decision is significant because it holds that a bankruptcy cannot be dismissed simply because of the mere presence of a marijuana business or related proceeds in the case.
On March 8, the Consumer Financial Protection Bureau (“CFPB”) finalized the amendment to its 2016 Mortgage Servicing Final Rule (“2016 Final Rule”) to clarify the transition timing for mortgage servicers to provide periodic statements and coupon books when a consumer enters or exits bankruptcy.
Commercial landlords in New York often find that their efforts to evict defaulted tenants are frustrated when, after serving the defaulting tenant a notice to cure, the tenant obtains a “Yellowstone” temporary restraining order (TRO) pursuant to First National Stores v. Yellowstone Shopping Center, 21 N.Y.2d 630 (1968). As discussed below, a recent New York decision may allow a landlord to avoid a Yellowstone injunction by including lease language waiving the tenant’s rights to declaratory and injunctive relief.
On March 8, 2018, the Consumer Financial Protection Bureau (CFPB or Bureau) finalized certain changes to its mortgage servicing rules. The Bureau issued a final rule1 to provide mortgage servicers with more flexibility and certainty regarding requirements to communicate with borrowers under the CFPB’s 2016 mortgage servicing amendments.
Background
On January 31, 2018, the Appellate Division, Second Department affirmed,[1] in a 3-1 decision, the Kings County Supreme Court Commercial Division’s decision, denying 159 MP Corp. and 240 Bedford Ave Realty Holding Corp.’s (collectively the “Tenants”) motion for a Yellowstone injunction.
On March 1, the Federal Housing Administration (FHA) released Mortgagee Letter ML 2018-02 (ML 2018-02), which extends the 180-day foreclosure moratorium on FHA-insured properties in Puerto Rico & the U.S. Virgin Islands affected by Hurricane Maria for an additional 60-days. The foreclosure moratorium is now in effect until May 18.
In a decision approved for publication, New Jersey’s Appellate Division recently remanded an action to the Chancery Division in order to determine whether a lender improperly collected more than one-hundred percent of the debts owed to it. SeeBrunswick Bank & Tr. v. Heln Mgmt. LLC, 2018 WL 987809 (N.J. Super. Ct. App. Div. Feb. 21, 2018). In the case, the lender made five construction loans to two entities, which were guaranteed by the entities’ principal and his daughter.
The Bankruptcy Appellate Panel of the Sixth Circuit recently held that the constructive notice provisions of section 1301.401 of the Ohio Revised Code do not limit a bankruptcy trustee’s avoidance powers as a hypothetical judgment lien creditor under section 544(a)(1) of the federal Bankruptcy Code.
A copy of the opinion is available at: Link to Opinion.
The Superior Court of Pennsylvania recently affirmed a trial court’s order granting a title insurance company summary judgment based on a defect that a survey of the premises would have shown. SeeKreider v. Correia, 2018 WL 359285 (Pa. Super. Ct. Jan. 11, 2018). In the case, the plaintiff insured purchased a property after the lender had obtained it via a foreclosure (the “Property”). Before plaintiff purchased it, the real estate agent informed him that the Property included a two-car garage and some other surrounding land.