Lacy-McKinney v. Taylor, Bean & Whitaker Mortgage Corp.
937 N.E.2d 853
| Ind. Ct. App. | 2010Background
- Lacy-McKinney financed a FHA-insured mortgage on a South Bend property; loan later assigned to Taylor-Bean.
- Taylor-Bean sought foreclosure after Lacy-McKinney fell behind on payments under the Note and Mortgage.
- HUD/FHA regulations (Subpart C) govern mortgage servicing, including loss mitigation and face-to-face meeting requirements.
- Taylor-Bean sent many communications and loss-mitigation efforts but did not hold a face-to-face meeting prior to filing foreclosure.
- Lacy-McKinney asserted HUD servicing noncompliance as an affirmative defense and argued summary judgment was improper due to disputed facts.
- Trial court granted summary judgment in favor of Taylor-Bean; this court reverses and remands.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether HUD servicing compliance is an affirmative defense to foreclosure | Lacy-McKinney argues noncompliance bars foreclosure | Taylor-Bean contends regulations are not a private defense | HUD servicing is a binding condition precedent and may be raised as a defense |
| Whether summary judgment was proper given material facts about HUD obligations | Genuine issues exist about face-to-face meeting and loss mitigation | No genuine issues if compliance shown; grant is proper | Summary judgment reversed; remand for fact-finding on compliance with Subpart C |
Key Cases Cited
- Bankers Life Co. v. Denton, 458 N.E.2d 203 (Ill. App. 1983) (HUD servicing requirements may be raised as a defense to foreclosure)
- Cross v. Fed. Nat'l Mort. Ass'n, 359 So.2d 464 (Fla. Dist. Ct. App. 1978) (HUD servicing responsibilities may be used as defense despite no private right of action)
- Roberts v. Cameron-Brown Co., 556 F.2d 356 (5th Cir. 1977) (Handbook guidelines not controlling when not published; ADA of HUD servicing)
- Wells Fargo Home Mortg., Inc. v. Neal, 398 Md. 705, 922 A.2d 538 (Md. 2007) (mortgagor may defend on HUD servicing noncompliance)
- Federal Nat'l Mortg. Ass'n v. Ricks, 83 Misc.2d 814, 372 N.Y.S.2d 485 (N.Y. Sup. Ct. 1975) (noncompliance may be raised as defense to HUD foreclosure)
- Denton (Bankers Life Co. v. Denton), 76 Ill.Dec. 64, 458 N.E.2d 203 (Ill. App. 1983) (affirmative defense rationale for HUD servicing requirements)