Category Archives: Litigation Developments

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Florida Third District Court of Appeal’s Ruling in Favor of Reverse Mortgage Lender Signals New Positive Outlook for Non-Borrowing Spouse Issue

Reverse mortgage lenders received a significant victory in Florida’s Third District Court of Appeal last week when the court issued its decision in OneWest Bank, FSB v. Palmero. After previously ruling in Smith v. Reverse Mortgage Solutions, Inc. and Edwards v. Reverse Mortgage Solutions, Inc. that the surviving spouses of borrowers who had taken out reverse mortgage … Continue Reading

New Decision from the D.C. Court of Appeals Recognizes Additional Defenses to HOA Super-Priority Lien Statute

As we noted in last week’s blog post, the District of Columbia Court of Appeals issued a decision on March 1, 2018, that created a new wave of uncertainty for lenders with loans secured by deeds of trust on condominium units in the District of Columbia. In the Liu decision, the court held that a … Continue Reading

HOA Super-Priority Lien Law Preempted by Federal Statute

Given the significant role Fannie Mae and Freddie Mac have in the national housing market, it is unsurprising that both have become embroiled in the Nevada HOA super-priority lien litigation. Since July 2008 – well before the Nevada Supreme Court held that an HOA’s foreclosure on its super-priority lien could extinguish a first deed of … Continue Reading

Supreme Court Narrowly Interprets “Whistleblower” under Dodd-Frank, Foreclosing Protections for Those Who Fail to Report Issues to SEC

The Supreme Court has resolved a circuit split on whether Dodd-Frank’s whistleblower protections apply only to employees who report their concerns to the Securities and Exchange Commission (SEC). On Wednesday, in Digital Realty Trust, Inc. v. Somers, the Supreme Court ruled 9-0 in favor of limiting the Dodd-Frank Act’s definition of whistleblower to those who … Continue Reading

Fourth Circuit Asked to Rule on Whether Mortgage Retroactively Incorporates Federal Servicing Requirements

A recent appeal to the Fourth Circuit may shed light on whether Virginia borrowers can assert federal mortgage servicing requirements as a defense to foreclosure when the mortgage instrument pre-dates the federal requirement. In Stansbury v. Federal National Mortgage Association, borrower Hollie Stansbury argues that a 2011 consent order between her mortgage servicer and the … Continue Reading

Would the 7th Circuit Have Changed Its FCA Standard but for Peer Pressure?

The Seventh Circuit finally abandoned its “but-for” causation standard for False Claims Act (FCA) damages. The decision comes 25 years after the Seventh Circuit first adopted its controversial standard requiring only a showing that an injury would not have occurred if not for the conduct. The Seventh Circuit has long been the lone outlier among … Continue Reading

Jury Verdict Expands to $298 Million in False Claims Act/FIRREA Case as Court Assesses Treble Damages and Penalties

A federal court in Texas recently entered a massive judgment against a mortgage originator for financial crisis conduct, transforming an already severe $93 million jury verdict into a $298 million punishment, and issuing one of the first judicial opinions regarding how to assess penalties under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 … Continue Reading

Supreme Court Narrows Application of Implied Certification under the False Claims Act and Establishes a Demanding Materiality Standard

The Supreme Court’s decision in Universal Health Services v. United States ex rel. Escobar reframes when falsity may be implied under the False Claims Act (FCA) and raises the bar for materiality under the statute. Though the Court upholds the controversial theory of implied false certification, Escobar limits it to situations where both (1) a claim … Continue Reading

In a Major FIRREA Victory for the Banks, the Second Circuit Overturns $1.27 Billion Jury Verdict

On Monday, the Second Circuit overturned a jury verdict and $1.27 billion penalty against Bank of America imposed under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), 12 U.S.C. § 1833a. Because the Government failed to demonstrate that Countrywide Home Loans, Inc. (Countrywide) intended at the time of contracting to defraud Fannie … Continue Reading

Leaving Real Estate Investment Trusts in the Cold: How the Americold Case Could Preclude Establishing Diversity Jurisdiction in Federal Court

The Supreme Court’s most recent citizenship opinion, Americold Realty Trust v. Conagra Foods, Inc., could make removing or keeping a case in federal court based on diversity more difficult for a statutory trust with a proprietary or complex ownership structure. With Americold, the Supreme Court clarified a circuit split regarding the citizenship of statutory trusts. … Continue Reading
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