The Supreme Court of Indiana recently confirmed a mortgagee’s ability to seek an in rem judgment against property for which there was an outstanding lien balance after the borrowers obtained a discharge of their Chapter 7 bankruptcy.

In so ruling, the Court distinguished the difference between an in rem and in personam judgment, and rejected the borrowers’ unsupported argument that the debt was paid in full by the time the mortgagee initiated foreclosure proceedings against the borrowers.

On March 9, 2017, a bankruptcy court in New York became the latest to weigh in on the developing circuit court split regarding whether modification of mortgages should be permitted under 11 U.S.C.

Kansas-based Payless, Inc. filed for Chapter 11 bankruptcy protection in the Eastern District of Missouri (St. Louis) on Tuesday afternoon, under docket # 17-42257.

The U.S. Court of Appeals for the Ninth Circuit recently reversed the dismissal of a Fair Debt Collection Practices Act claim arising out of a non-judicial foreclosure. The Ninth Circuit ruled that section 1692f(6) of the FDCPA applies to non-judicial foreclosure activity.

A copy of the opinion in Dale Dowers v. Nationstar Mortgage, LLC is available at: Link to Opinion.

The Appellate Court of Illinois, Second District, recently affirmed summary judgment in favor of a mortgagee that failed to meet the FHA requirement to either have a face-to-face meeting with the borrowers or to make “a reasonable effort” to arrange a face-to-face meeting before filing foreclosure, because doing so would have been a futile act after the borrowers’ mortgage loan debt was discharged in bankruptcy and they did not reaffirm the debt.

(S.D. Ind. Feb. 27, 2017)

The district court dismisses the appeal because the bankruptcy court’s order was not final and appealable. The creditor had filed an emergency motion for stay relief to proceed with acquiring title to the debtor’s real property through Indiana’s tax sale and tax deed procedures. The bankruptcy court denied the motion without prejudice. The district court holds that the bankruptcy court’s order was not final, in part because it was without prejudice and appeared to be a preliminary decision. Opinion below.

Judge: Young

One of the most powerful and oft used devices in bankruptcy is the sale of assets “free and clear” of liens, claims and interests. One issue a buyer at a bankruptcy sale must consider, however, is whether due process has been met with respect to parties whose liens, claims and/or interests are released through such sale. Indeed, a lack of due process could foil a “free and clear” sale, leaving a buyer with an encumbered purchase and nowhere to turn for recourse.

The United States District Court for the Western District of New York recently granted defendant’s motion to dismiss plaintiff’s first cause of action alleging violations of the Fair Debt Collection Practices Act, 15 U.S.C. 1692 et seq. (“FDCPA”), on the ground that plaintiff failed to sufficiently plead that the communications from defendant were sent in an attempt to collect a debt. SeeBurns v. Seterus, Inc., 2017 WL 104735 (W.D.N.Y. Jan. 11, 2017). In 2005, plaintiff signed a note and mortgage secured by her residence.

The Ninth Circuit Court of Appeals recently provided landlords dealing with a rejected lease with further guidance on the size and basis of their claims against a tenant’s bankruptcy estate. Kupfer v. Salma (In re Kupfer), No. 14-16697 (9th Cir. Dec. 29, 2016). The Ninth Circuit held that the statutory cap – 11 U.S.C.

The United States Bankruptcy Code, pursuant to 11 U.S.C. Section 502(b)(6), caps a landlord's claim in bankruptcy for damages resulting from the termination of a real property lease. See In re PPI EnterprisesU.S., 324 F.3d 197, 207 (3rd Cir. 2003). Under Section 502(b)(6), a landlord-creditor is entitled to rent reserve from the greater of one lease year or 15 percent, not to exceed three years, of the remaining lease term.