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Patricia Paruch, Kemp Klein Law Firm
Foreclosure by Advertisement Violated “One Action Rule”
By Jeshua T. Lauka, David & Wierenga, P.C.
In Greenville Lafayette, LLC v. Elgin State Bank, (Mich. App., No. 308450, April 17, 2012) the Michigan Court of Appeals invalidated a mortgagee’s foreclose by advertisement initiated simultaneously with its lawsuit on the debt’s guaranty.
The court acknowledged a mortgagee’s general ability to foreclose by advertisement and simultaneously sue on a guarantee, pursuant to US v. Leslie, 421 F.2d 763, 766 (CA6, 1970). Leslie held that in such case a “guaranty is an obligation separate from the mortgage note.” Id. However, the Greenville court distinguished the Bank’s mortgage from the one in Leslie, holding that the Bank’s mortgage defined “indebtedness” to mean “all … amounts … under the Note or Related Documents ….” The mortgage defined “Related Documents” to include “all … guaranties … executed in connection with Indebtedness.” The court held the lawsuit was an action to recover the debt pursuant to MCL 600.3204(1)(b) and it invalidated the foreclosure.
Application for lenders’ counsel: avoid the “One Action Rule” by not including “guaranties” in a mortgage’s definition of “indebtedness.”
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July 18-21, 2012
Be Careful When Drafting Tenant/Debtor Criteria
By Howard A. Lax, Lipson, Neilson, Cole, Seltzer & Garin, P.C.
The federal government increased its commitment to reduce discriminatory practices that limit opportunities for minority groups. The U.S. Department of Housing and Urban Development (HUD) issued a rule prohibiting discrimination based on sexual orientation in HUD assisted programs. The Consumer Financial Protection Bureau issued a bulletin reminding lenders that compliance with equal credit opportunity laws will be strictly enforced. HUD’s proposed rule reaffirms its commitment to prohibit housing business practices that have a disparate impact on protected classifications. U.S. Department of Justice’s investigations of certain business practices for discriminatory impact are increasing, as evidenced by the recent charges against GFI Mortgage.
Landlords, private lenders, and others should evaluate “credit” and “housing” application practices, approval criteria, and discretionary pricing policies for disparate impact based on race, color, religion, national origin, sex, marital status, age, sexual orientation, or handicap. Businesses should also evaluate practices for discriminatory impact based on classifications that the state and local units of government protect. For example: