A bit of banking leap-frog.

On December 7, 2012, the Maryland Court of Special Appeals issued it's opinion affirming a trial court decision in favor of our client, Bank of America, N.A., protecting it's $201,000 lien from attack by another lender. 

The Bank of America building, in Baltimore, MD

The other lender, Dominion Financial, loaned about $200,000 to the prior owner of a home, but just did not get around to recording a deed of trust for several months.  Meanwhile, the house was sold to a young single mom, who borrowed money from BOA to finance her purchase.  Most of this borrowed money was spent paying off the seller's open mortgage loan. BOA then won the race to the land records, and recorded it's deed of trust, first. Dominion may have made it's loan before BOA, but it recorded second.

In the Circuit Court for Baltimore City, Dominion sued for a court order declaring that it's lien on the property was in the first position, entitling it to take all of the proceeds in the event of a foreclosure sale. On behalf of Bank of America, we argued that the law of "equitable subrogation" allowed BOA to leap-frog over Dominion to the first lien position because BOA had paid of an earlier lien owed by the seller.

This case took two years to wind through the court system. First, there was discovery in the Circuit Court, and the parties followed with cross-motions for summary judgment.  The case then went to trial, before the Hon. Evelyn Cannon.  At the end of the case, Judge Cannon found in favor of BOA, and Dominion appealed. This appellate decision ends the matter.

The path to a just result is long. In this case it was a two year journey!

But this is not just a "feel good" story of bank-versus-bank. The finality of this decision benefits the single mom who needs to discuss a loan modification or refinance. Open disputes between lenders often prevent borrowers from getting relief from their bank simply because the lender's situation is unsettled.

Masssachussetts takes on the Medusa

The Massachussetts Attorney General has cast herself as Perseus, hoping to slay the many headed banking Medusa that allegedly has been foreclosing upon Massachussetts citizens in violation of state recording and foreclosure laws. The December 1, 2010 Complaint alleges that lenders have sued to foreclose while falsely representing themselves as the "holder" of the indebtedness. The Complaint recites examples where the foreclosing lender did not take actual assignment of the mortgage until after the cases were filed, after important orders and affidavits were filed, or even after the foreclosure process was final. This is alleged to be a deceptive and unfair trade practice.

But wait, there's more!

Unlike Maryland, the Commonwealth of Massachussetts requires that every transaction involving real property, including assignments of interests in the recorded liens, must hit the land records. Several lenders are being sued for deceptive and unfair trade practices for keeping MERS related assignments off record.

WWMD (what would Maryland do)?  IHTS (it's hard to say). Read more after the jump.

But who is thinking of the lawyers!

With Bank of America's announced freeze on foreclosures, nationwide, I wonder about the foreclosure mills, and the hundreds of lawyers that fan out throughout the state each day to conduct their sales. And there are the hundreds of processors (they rarely answer the phones, but they are there, trust me) who manage the pre-sale and post-sale processes. What is to become of them? Can they be bailed out?

I'm guessing they will have more time to focus on title, and generating new and more interesting title claims. C'mon folks, I'm waiting!