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Mortgage Lawsuits News | Mortgage Litigation Index
Mortgage industry lawsuit news and mortgage litigation coverage. Stories about legal settlements, judgments and mortgage class actions.

Lenders Litigate Title Claims

Recent litigation related to property title

Aug. 31, 2010

By staff

Title insurers and mortgage bankers are battling in court over title insurance claims. One mortgage lender is using litigation to secure a superior lien position on a loan it refinanced after a judgment was issued against the borrower.

Wells Fargo Financial Kentucky Inc. won an appeal with the Court of Appeals Kentucky in a lawsuit against John Robert Thomer and Dawn Alexis Thomer, according to a copy of the decision posted by Leagle.

A $152,000 mortgage made to James M. Grimme and Kathleen A. Grimme in March 2000 by Norwest Financial America Inc. -- Wells' predecessor -- was refinanced for in August 2002 by Wells. The loan balance climbed to $158,000 after the refinance from $141,000. But in between the two transactions, the Thomers obtained a $15,000 judgment against the Grimmes for a personal truck loan.

The trial court cited language in Wells' 2000 mortgage instrument stating that the loan "also secures payment of any future note or notes executed and delivered to mortgagee by mortgagor after the date hereof" in granting a summary judgment in favor of the Thomers. But the appeals court disagreed "as to which party should have prevailed," reversed the judgment and remanded for further consistent proceedings.

"They cannot show that the extension of additional credit was not within the scope of the future advance clause of the original mortgage," the court wrote of the Thomers. "In fact, the original mortgage provides that the maximum indebtedness secured by the mortgage could increase to the sum of $200,000.

On July 7, Eric Koppelman was handed down a 4-year sentence by a federal judge in Manhattan, according to a statement from the U.S. Department of Justice.

Koppelman was a former title closer who allegedly conspired with mortgage broker Irshad Ramzan to steal $6 million in funds that were supposed to be used to pay off existing mortgages. Ramzan supervised the operations of Platinum Funding in Queens, N.Y. The government claims the two lied to financial institutions about using the proceeds of loans to pay off seller financing when in fact they directed the funds to companies they controlled for personal use.

Ramzan, who was additionally charged with mortgage fraud, received an 84-month sentence.

JPMorgan Chase & Co. lost an appeal on a lawsuit filed by First American Title Insurance Corp., according to a copy to the decision from the U.S. Court of Appeals, Third Circuit, that was posted by Leagle. JPMorgan was appealing an order granting attorney's fees and costs to First American for JPMorgan's attempt to remove the underlying action from state court.

An $868,500 loan to Christopher Fekos made by Allied Mortgage Group Inc. was subsequently acquired by Bank One, N.A., and Bank One was subsequently acquired by JPMorgan. First American's agent, Ideal Settlement Services, failed to record the mortgage. Two subsequent mortgages closed on the property left JPMorgan in a subordinate lien position.

In anticipation of a lawsuit by JPMorgan, First American preemptively filed a lawsuit in Pennsylvania state court seeking a declaratory judgment that it doesn't have to indemnify JPMorgan because "Bank One, JP Morgan's predecessor in interest, failed to provide First American with timely notice of the foreclosure action and Sheriff's Sale on the property, which prejudiced First American and violated the notice provision of the policy."

The Supreme Court of Indiana ruled that U.S. BANK, N.A., can move forward with a tort claim against Integrity Land Title Corp., according to a copy of the decision from The case revolves around a $123,090 mortgage made that closed at Integrity. The title search at the time did not reveal a 1998 foreclosure judgment on the property from LPP Mortgage LTD.

The loan was made in 2006 by Texcorp Mortgage Bankers and subsequently acquired by U.S. Bank. The title company claimed it had no contractual obligation to U.S. Bank, and that the "economic loss rule" prevented the lender from recovering in tort.

Case No. 2008-CA-001837-MR (Court of Appeals of Kentucky).

In re. Eric Koppelman and Irshad Ramzan.
(U.S. District Court for the Southern District of New York).

FIRST AMERICAN TITLE INSURANCE CORPORATION v. JP MORGAN CHASE & CO., Successor by merger to Bank One, NA as Trustee for the Benefit of the Certificate Holders Under the Pooling and Servicing Agreement Relating to the Mortgage Backed Pass Through Certificates Series 2002-29; IDEAL SETTLEMENT SERVICES, LLC JP Morgan Chase & Co., Appellant.
Case No. 07-3996 (U.S. Court of Appeals, Third Circuit)

Case No. 17S03-1002-CV-120 (Supreme Court of Indiana).

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