This past week, 1st Fidelity Loan Servicing, LLC had its foreclosure of plaintiff Doris Ruiz thrown out on appeal because, the Minnesota Court of Appeals held, the Hennepin County District Court (Daly, J.) erroneously required only “substantial compliance” of the foreclosing party rather than “strict compliance” with Minnesota’s non-judicial foreclosure process.
So, for example, a recorded assignment to “1st Fidelity” rather than the full name, “1st Fidelity Loan Servicing, LLC” was fatal. (The opinion also notably discusses lock-changing and door being broken down (“self-help”) — conduct that the trial court appears to have concluded reflected badly on the plaintiff but the Court of Appeals seems to have been more inclined to fault the defendant.)
The Bank of New York Mellon fared considerably better recently in defending a claim made by its foreclosed Minnesota borrower (but still was chided by the Court).
In the Sovis case, U.S. District Court Judge Donovan W. Frank (D. Minn.) threw out the foreclosed homeowner lawsuit that was based in large part on a lender’s ultimately unsuccessful discussions (and perhaps commitments?) regarding a mortgage modification under the Homeowners Affordable Modification Program (“HAMP”).
In a nutshell, the federal statute does not include a right to bring a lawsuit and “credit agreements” have to be in writing under Minnesota law so that alleged oral promises with regard to credit are not worth the paper they are not written on.
So why isn’t Judge Frank’s decision in favor of the lender a “home run” for the lender? He concludes the opinion:
Assuming Plaintiff’s allegations are true, Defendants can fairly be criticized for a lack of professionalism, excessive disorganization, as well as a cavalier attitude while stringing Plaintiff along in the modification process. Even so, Defendants’ actions, as alleged, do not rise to the level of actionable conduct.