2011 Commercial Law Developments
II. Real Property Secured Transactions
- In March 2011 the Permanent Editorial Board for the UCC published its Draft Report on UCC Rules Applicable to the Assignment of Mortgage Notes and to the Ownership and Enforcement of those Notes and the Mortgages Securing Them . The final Report is expected to be published later this year. The draft Report can be accessed at http://extranet.ali.org/directory/files/PEB_Report_on_Mortgage_Notes-Circulation_Draft.pdf
- Deutsche Bank Trust Co. v. McCoy , 29 Misc. 3d 1202, 2010 WL 3769220 (N.Y.Sup. 2010) – While the mortgage follows the note, the reverse is not the case.
- U.S. Bank v. Ibanez, 941 N.E.2d 40 (Mass. 2011) – Mortgage noteholders were not entitled to enforce the mortgages non-judicially because they failed to prove that they had received an assignment of the mortgages. Under Massachusetts common law, assignment of a mortgage note does not automatically carry with it an assignment of the mortgage.
- Residential Funding Co, LLC v. Saurman, 2011 WL 1516819 (Mich. Ct. App. 2011) – MERS is not permitted to conduct non-judicial foreclosure of mortgage held in its name because it was not the owner of the note and the applicable state statute does not permit an agent of the noteholder to foreclose non-judicially.
- In re Gluth Bros. Construction, Inc., 451 B.R. 447 (Bankr. N.D. Ill. 2011) – Mortgagee that had been paid in full was required under state law to record a release of the mortgage even though it had already been sued to avoid some payments and the mortgage expressly indicated that the lien is reinstated if the mortgagee is required to disgorge any payment.
- Bloomfield State Bank v. United States, 644 F.3d 521 (7th Cir. 2011) – Mortgagee's interest in rents collected by court-appointed receiver after a notice of federal tax lien had been filed had priority in the rents because the rents were proceeds of the underlying real property.
- West Ridge Group, LLC v. First Trust Co. of Onaga, 414 Fed. Appx. 112 (10th Cir. 2011) – Loan agreement that provided that “Borrower may pay . . . a pro-rata share of any outstanding indebtedness to obtain a corresponding pro-rata partial release” of the mortgaged property entitled the borrower to a release based on the relative value – not the relative acreage – of the parcel to be released.
- First Nat'l Bank of Omaha v. Anxon, Inc., 2010 U.S. Dist. LEXIS 114003 (D. Minn. 2010) – An alleged oral agreement by a lender to accept a deed in lieu instead of a repayment did not satisfy the statute of frauds. This lender could not be forced to accept property in lieu of repayment.
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