Update (April 17, 2013): A Minnesota Supreme Court set-back for foreclosing lenders today, a hint of leverage for the small percentage of defaulting borrowers whose lenders’ paperwork was inaccurate and recorded prior to the start of the foreclosure process. Not a surprising decision.
Update (November 12, 2012): In this mortgage foreclosure case in which the lender did not cross every “T” and dot every “I” as it should have David Mortenson of Wilford Geske & Cook argued on behalf of the foreclosing entity before the Minnesota Supreme Court last week. Jonathan Drewes argued on behalf of Doris Ruiz, whose home was foreclosed by 1st Fidelity Loan Servicing, LLC.
The Minnesota Supreme Court pushed Mortenson quite hard on “strict compliance” vs. “substantial compliance.” Mortenson began his argument emphasizing practical and policy considerations. Drewes, of course, relied heavily on the long history of strict construction of the statute at issue.
Original post (10/18/12): Next month, the Minnesota Supreme Court will hear argument in the case of Doris Ruiz against 1st Fidelity Loan Servicing, LLC.
The issue in the case is whether the foreclosing entity, loan servicer/defendant 1st Fidelity Loan Servicing LLC, is in a “world of pain” (a.k.a., is liable to plaintiff) because it foreclosed in the name of “1st Fidelity” and not “1st Fidelity Loan Servicing LLC.” Minnesota law calls for strict compliance with its foreclosure statutes. If foreclosers have to “strictly comply,” does that mean they must perfectly comply?
The case includes a related claim. Ms. Ruiz’s property was a duplex. After the foreclosure and after the lapse of the redemption period, an agent for the forecloser inspected the property, concluded that one of the two premises was unoccupied, and changed the locks to secure the property.
Ms. Ruiz, however, allegedly occupied both parts of the duplex. She therefore broke into the upstairs premises and, because she alleges the entire foreclosure was invalid, she argues that locking her out of her own property was also illegal.
The argument is more than a little similar to another matter in which I went to trial alongside the same law firm that is representing 1st Fidelity Loan Servicing LLC here, Wilford & Geske, nearly two years ago.
Suffice it to say that our legal system is appropriately concerned that foreclosing lenders follow proper steps when taking possession of Minnesotans’ homes. On the other hand, others will argue that an absolutist and extreme sense “strict compliance” does not truly protect Minnesotans from bad lender practices. It gums up and unnecessarily adds great expense to an already costly process.
Plaintiff is represented by Drewes Law.
Author Seth Leventhal is a Minnesota litigator with over 15 years of experience in Minnesota civil litigation who recognizes that some legal rules call for strict compliance while substantial compliance is sufficient for many others.