Articles Posted in Banking

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When a foreclosure action brought on a borrower’s default on a note has been dismissed with prejudice, and the lender has not validly accelerated payment of the amount due under the note, claim preclusion does not bar the lender from bringing a subsequent foreclosure action based upon the borrower’s continuing default on the same note. After Borrower defaulted on a note, Lender filed suit seeking to foreclose on the property securing the note. The circuit court determined that Lender failed to present sufficient evidence to prevail in its foreclosure action and dismissed the lawsuit with prejudice. Later, Bank, the entity servicing Borrower's loan, sent Borrower a notice of intent to accelerate payment of the note. Borrower did not cure his default, and Bank filed a complaint initiating the instant lawsuit. Borrower moved to dismiss, arguing that the lawsuit was barred by the doctrine of claim preclusion. The circuit court did not apply claim preclusion to any default alleged to have occurred after judgment was entered in the earlier lawsuit. The Supreme Court affirmed this conclusion, holding that claim preclusion did not bar the second lawsuit because the lawsuit alleged new facts giving rise to a new and subsequent default and a different transaction than that presented in the first foreclosure action. View "Federal National Mortgage Ass’n v. Thompson" on Justia Law

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At issue in this foreclosure case was whether presentment by a party’s attorney of an original, wet-ink note endorsed in blank is admissible into evidence and enforceable against the borrower without further proof that the holder had possession at the time the foreclosure action was filed. The Supreme Court reversed the court of appeals’ summary disposition reversing the circuit court’s foreclosure judgment against Defendant in favor of Bank. Bank produced a note at trial, and the circuit court concluded it was the original note executed by the borrower. The court of appeals concluded that the issue of possession of the original note had to be proven at trial and that Bank was required to present testimony from a witness with personal knowledge who could verify possession of the note by Bank up to the moment Bank presented the note to the circuit court. The Supreme Court reversed, holding that presentment to the trier of fact in a mortgage foreclosure proceeding of the original, wet-ink note endorsed in blank establishes the holder’s possession and entitles the holder to enforce the note. View "Deutsche Bank National Trust Co. v. Wuensch" on Justia Law

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At issue in this foreclosure case was whether presentment by a party’s attorney of an original, wet-ink note endorsed in blank is admissible into evidence and enforceable against the borrower without further proof that the holder had possession at the time the foreclosure action was filed. The Supreme Court reversed the court of appeals’ summary disposition reversing the circuit court’s foreclosure judgment against Defendant in favor of Bank. Bank produced a note at trial, and the circuit court concluded it was the original note executed by the borrower. The court of appeals concluded that the issue of possession of the original note had to be proven at trial and that Bank was required to present testimony from a witness with personal knowledge who could verify possession of the note by Bank up to the moment Bank presented the note to the circuit court. The Supreme Court reversed, holding that presentment to the trier of fact in a mortgage foreclosure proceeding of the original, wet-ink note endorsed in blank establishes the holder’s possession and entitles the holder to enforce the note. View "Deutsche Bank National Trust Co. v. Wuensch" on Justia Law

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The circuit court applied the proper standard of law to the facts of record when it concluded that Nationstar Mortgage LLC acted in bad faith and then awarded attorney fees to Robert Stafsholt. Further, Nationstar may collect interest on the principal amount of the loan accrued during litigation because Stafsholt would receive a windfall if he was both excused from paying interest and received his attorney fees. Specifically, the Supreme Court held (1) circuit courts may include attorney fees as part of an equitable remedy “in exceptional cases and for dominating reasons of justice”; and (2) the circuit court properly exercised its discretion in this case. View "Nationstar Mortgage LLC v. Stafsholt" on Justia Law

Posted in: Banking

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Wis. Stat. 846.165 does not require a circuit court to make a determination of a guaranty credit at the time a foreclosure sale is confirmed. Further, when an action for foreclosure against a mortgagor and an action for a money judgment on a guaranty are brought in the same proceeding, the circuit court may decide the amount of a credit to be applied to a judgment on a guaranty either at the time the sale is confirmed or at another time. Petitioner sought review of the court of appeals' decision directing that the circuit court apply a credit of $2.25 million to a money judgment entered against Petitioner as a guarantor of a loan. Petitioner argued that the court of appeals erroneously limited the credit to the amount of the winning bid at the sheriff’s sale, thus precluding the circuit court from hearing evidence of the fair value of the property after the confirmation of sale. The Supreme Court reversed, holding (1) the circuit court properly decoupled the confirmation of sale from the determination of the guaranty credit; and (2) the stipulation in this case did not establish that the amount of the winning bid at the sheriff’s sale shall be the sole credit toward the money judgment against Petitioner. View "Horizon Bank, National Ass’n v. Marshalls Point Retreat LLC" on Justia Law

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Abbey Springs Condominium Association, Inc. and Abbey Springs, Inc. (collectively, Abbey Springs) have a policy forbidding both current and subsequent unit owners from utilizing recreational facilities until unpaid condominium assessments are paid in full. Following a foreclosure action and sheriff’s sale of the property to Walworth State Bank, the Bank paid the former owner’s outstanding assessment under protest. The Bank filed suit against Abbey Springs, asserting that the policy violates Wisconsin law by impermissibly reviving a lien on the condominium units that was eliminated by the foreclosure action. The court of appeals reversed. The Supreme Court reversed, holding that the condominium policy effectively revived the lien against the property that the foreclosure judgment entered against Abbey Springs and the former unit owners had extinguished, and therefore, the policy violates well-established foreclosure law and the foreclosure judgment entered in the underlying foreclosure action. Remanded. View "Walworth State Bank v. Abbey Springs Condo. Ass’n" on Justia Law

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After Shirley Carson defaulted on loan payments, Bank sought a judgment of foreclosure and sale of the mortgaged premises. The circuit court entered judgment in favor of Bank of New York Mellon (“the Bank”). More than sixteen months after the judgment of foreclosure was entered, the Bank had not sold the property. Carson filed a motion to amend the judgment to include a finding that the property was abandoned and an order that the Bank bring the property to sale within five weeks from the date of entry of the amended judgment. The circuit court denied the motion, concluding that it lacked the authority to order the Bank to sell the property at a specific time under Wis. Stat. 846.102. The court of appeals reversed, concluding that the court may use its contempt authority to order a sale under these circumstances. The Supreme Court affirmed, holding (1) when the circuit court determines that a property is abandoned, section 846.102 authorizes the court to order a mortgagee to bring the property to sale after the redemption period; and (2) because the circuit court in this case did not reach the issue of whether the property had been abandoned, the case must be remanded. View "Bank of New York v. Carson" on Justia Law

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Defendants executed guaranty contracts in order to secure financing to run their business operations. Bank subsequently commenced foreclosure proceedings on the business. Afterwards, Bank commenced an action against Defendants seeking payment under the guaranty contracts. Defendants, in response, alleged several counterclaims and affirmative defenses. Bank filed a motion for summary judgment, arguing that Defendants' counterclaims and affirmative defenses were derivative of the corporation, and therefore Defendants lacked standing to raise them. Bank also asserted that Defendants' affirmative defenses were barred because they were subject to claim preclusion. The circuit court ultimately granted summary judgment to Bank. The court of appeals affirmed, concluding that Defendants' counterclaims and affirmative defenses were derivative and that they lacked standing to raise them in this action. The Supreme Court affirmed, holding (1) Bank was entitled to summary judgment dismissing all of Defendants' counterclaims, as each of the counterclaims was derivative; (2) Defendants' affirmative defenses did not defeat Bank's demand under the guaranties for payment; and (3) the circuit court correctly granted summary judgment to Bank because Defendants failed to raise any genuine issue of material fact showing payment was not due. View "Park Bank v. Westburg" on Justia Law