Mortgage Loan Servicer Sued For Race Discrimination After Denying Loan Assumption

Lesson. Creditors cannot discriminate against an applicant for a credit transaction based on race, but a plaintiff applicant needs to put forth evidence of discrimination in order to survive a creditor’s motion for summary judgment.

Case cite. Sims v. New Penn, 906_F.3d_678 (7th Cir. 2018)

Legal issue. Whether there was sufficient evidence of racial discrimination to avoid the entry of summary judgment against the Plaintiffs.

Vital facts. Plaintiffs, an African-American couple, bought a house that was subject to a mortgage that secured a loan to the seller. The loan later went into default. Upon learning of the mortgage and the default, the Plaintiffs tried to assume the loan in order to avoid a foreclosure sale. This went on for years. The mortgage contained language that purchasers of the mortgaged property could assume the loan if the loan servicer (a) received information to evaluate the purchasers “as if a new loan were being made” and (b) determined that the assumption “would not impair its security.”

At one point in time, the defendant loan servicer advised the Plaintiffs of what was needed in order to apply for a loan assumption, and the servicer postponed a foreclosure sale to give the Plaintiffs an opportunity to submit the required paperwork. The servicer contended that the Plaintiffs did not submit a proper application. In addition, the servicer required that the loan be made current before an assumption could occur but refused to disclose information about the status of the loan without the seller/mortgagor’s written consent, which evidently never occurred. In the end, the servicer did not approve a loan assumption.

The Plaintiffs alleged that the loan servicer denied the loan assumption based upon race. They alleged that they were treated rudely. The Plaintiffs also claimed that an African-American employee of the servicer told them over the phone: “[t]hese people, you know how they treat us.”

Procedural history. The Plaintiffs sued the loan servicer in federal court and alleged race discrimination under the Equal Credit Opportunity Act, 15 USC 1691-1691f (ECOA). The United States District Court for the Northern District of Indiana entered summary judgment for the defendant loan servicer, and the Plaintiffs appealed to the Seventh Circuit.

Key rules. The ECOA makes it “unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction, on the basis of race….” Section 1691(a)(1).

Holding. The Seventh Circuit affirmed the district court’s ruling.

Policy/rationale. The Plaintiffs argued that the defendant loan servicer discriminated against them when the servicer prohibited the Plaintiffs from assuming the loan. Specifically, the Plaintiffs claimed that the servicer delayed the application process and required them to first make all of the seller/mortgagor’s overdue payments as a condition of assumption, which condition was not required by the mortgage.

The Court concluded that the Plaintiffs’ “evidence of racial discrimination [was] too speculative to establish a dispute of material fact.” For the Plaintiffs to survive summary judgment, they needed to put forth more evidence than the employee’s alleged statement, which the Court found to be “vague and require[d] too much speculation to conclude that their race motivated [the servicer] to require them to satisfy [the seller’s] outstanding loan payments.” Further, the Plaintiffs did not tender any proof to dispute the servicer’s evidence that the Plaintiffs never produced a complete application.

As an aside, there was a question as to whether the ECOA applied in the first place because the Plaintiffs were trying to assume credit rather than “extend, renew or continue” credit.

Related posts.

I sometimes represent mortgage loan servicers in foreclosure-related litigation. My firm also has employment lawyers who defend race discrimination cases. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at Also, don’t forget that you can follow me on Twitter @JohnDWaller or on LinkedIn, or you can subscribe to posts via RSS or email as noted on my home page.

Enforcement Of Wisconsin Judgment In Indiana Defeated

Lesson. When enforcing an out-of-state judgment in Indiana, the law presumes that the foreign judgment is valid. That presumption can be overcome with proof that the plaintiff failed to properly serve the defendant with a summons and complaint in the original case.

Case cite. Troxel v. Ward, 111 N.E.3d 1029 (Ind. Ct. App. 2018)

Legal issue. Whether, following the entry of a judgment in Wisconsin, an Indiana order authorizing the sale of the Defendant’s stock was void because the Plaintiff served the Wisconsin summons and complaint at the Defendant’s former dwelling.

Vital facts. Defendant allegedly executed a guaranty of a $653,000 promissory note, which was in default. Troxel was about the Plaintiff’s efforts to collect on the guaranty in both Wisconsin and Indiana, and the related efforts by the Plaintiff to serve the Defendant with a summons and complaint. One of the compelling factors was that the Plaintiff served Defendant at his former residence in Indiana.

Procedural history. The Plaintiff obtained a judgment in Wisconsin and then sought to enforce the judgment in Indiana under I.C. 34-54-1. The Indiana trial court recognized the judgment and then, at the Plaintiff’s request, entered an order for the sale of the Defendant’s stock in a separate company for the purpose of satisfying the judgment. When the Defendant got wind of the judgment and stock sale, he filed a motion to set aside the judgment in the Indiana court.

Key rules.

Troxel set out the following general rule and its fundamental exception:

The United States Constitution requires state courts to give full faith and credit to the judgments of the courts of all states. U.S. Const. art. IV, § 1. However, an out-of-state judgment is always open to collateral attack for lack of personal or subject-matter jurisdiction. Thus, before an Indiana court is bound by a foreign judgment, it may inquire into the jurisdictional basis for that judgment; if the first court did not have jurisdiction over the parties or the subject matter, then full faith and credit need not be given.

A judgment entered without jurisdiction is “void.”

Importantly, the defendant/judgment debtor bears the burden of rebutting the presumption that a foreign judgment, which is regular and complete on its face, is valid.

Troxel spells out various trial rules applicable to service of a summons and complaint, including Trial Rule 4.1(A)(3). The Court noted that, under Indiana law, “service upon a defendant’s former dwelling [aka usual place of abode] is not sufficient to confer personal jurisdiction.” (This Indiana service rule applied to the original action in Wisconsin.)

Holding. The Indiana Court of Appeals reversed the trial court’s sale order.

Policy/rationale. The Plaintiff argued that the Wisconsin judgment was presumed to be valid and that the Defendant failed to overcome the presumption. The Court of Appeals disagreed and cited to evidence in the record that, a few weeks before he was served with process, the Defendant had moved from the service address. Because the Wisconsin court did not have personal jurisdiction over the Defendant when it entered judgment, the judgment was void. It followed that all the Indiana orders also were void.

Related posts.

Judgment creditors sometimes engage me here in Indiana to enforce judgments entered in other states. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at Also, don’t forget that you can follow me on Twitter @JohnDWaller or on LinkedIn, or you can subscribe to posts via RSS or email as noted on my home page.

Residential Borrower Denied Second Settlement Conference

Lesson. If borrowers fail to appear at a court-ordered, pre-judgment settlement conference that they requested, then their post-judgment request for a second conference will be denied. Borrowers – appear at the conference. Lenders – move toward a judgment if borrowers fail to comply with the court’s settlement conference order.

Case cite. El v. Nationstar Mortgage, 108 N.E.3d 919 (Ind. Ct. App. 2018)

Legal issue. Whether the trial court abused its discretion in denying a borrower’s motion for a second, post-judgment settlement conference.

Vital facts. El was a standard residential mortgage foreclosure case. The summons and complaint served upon the borrower contained the appropriate notices to the borrower regarding her rights, including the right to a settlement conference with the mortgage company. The borrower appeared in the action pro se and requested a settlement conference. However, she failed to show up at the court-ordered conference. She also failed to submit certain settlement-related documents required by court's order.

Procedural history. Following the settlement conference, which the lender attended, the lender filed a motion for an in rem summary judgment against the borrower. The trial court granted the motion. The borrower then moved for a second settlement conference. The trial court denied the motion, and the borrower appealed.

Key rules. Ind. Code 32-20-10.5, entitled “Foreclosure Prevention Agreements for Residential Mortgages,” outlines the rules and procedures surrounding the facilitation of settlement conferences and loan modifications. In particular, Section 10 outlines in detail rights and responsibilities of the parties and the courts with regard to settlement conferences.

Although Section 10 “contemplates the possibility of” a second settlement conference, the trial court’s decision on the matter is discretionary:

For cause shown, the court may order the creditor and the debtor to reconvene a settlement conference at any time before judgment is entered. 

Holding. The Indiana Court of Appeals affirmed the trial court’s decision.

Policy/rationale. The El opinion indicates that both the lender and the trial court complied with the statutory requirements of I.C. 32-20-10.5. The borrower did not. The Court of Appeals noted that the borrower filed her second motion two months after judgment had been entered. Interestingly, the Court went so far as to say the trial court had no discretion to reconvene the settlement conference because the case had already been resolved. The Court also stated that the borrower did not show any “cause” for a second bite at the apple.

Related posts.


Lenders and mortgage loan servicers sometimes engage me to handle contested foreclosure cases. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at Also, don’t forget that you can follow me on Twitter @JohnDWaller or on LinkedIn, or you can subscribe to posts via RSS or email as noted on my home page.

Indiana General Assembly Update

This follows up my April 12th post Indiana General Assembly: Nothing Cooking This Year.  The sheriff's sale notice legislation I mentioned last month got new life but ultimately did not pass.  The Indiana Lawyer mentions that development (see, "Newspapers survive scare" section) and others in its article this week entitled What lawmakers did — and didn’t do — in the 2019 session.

Seventh Circuit Reminds Us That Federal Law, And Not Indiana State Law, May Apply To Some Successor/Alter-Ego Claims

Lesson. If you’re trying to collect a judgment in federal court based upon veil-piercing theories, make sure you’re applying the correct legal standard. If the underlying claim arises out of a federal statute, Indiana’s state law tests may not apply. Although similar in nature, the standards are not the same and require a different analysis.

Case cite. McCleskey v. CWG Plastering 897 F.3d 899 (7th Cir. 2018)

Legal issue. Whether Indiana state law versus federal law standards controlled the outcome of plaintiff’s successor and alter ego claims against defendant.

Vital facts. As discussed here before (see below), corporate veil piercing cases tend to be very fact sensitive, and McCleskey is no different. Please review the opinion for a summary of the operative evidence. The Court examined whether a son’s plastering business should be liable for a judgment previously entered against the plastering business of the son’s father. The judgment stemmed from the father’s failure to make certain payments to a union. The Court noted, among other things, the “inconvenient fact” that the son went into business the same day that the $190,940.73 judgment was entered against his father’s company.

Procedural history. The district court (the trial court) granted summary judgment for the defendant (son), and the plaintiff appealed.

Key rules. Generally, cases resting on federal ERISA and NLRA statutes, including 29 U.S.C. § § 1132, 1145 and 29 U.S.C. § 185(a), respectively, “are within the federal court’s subject-matter jurisdiction and typically governed by federal law.”

Under federal law, both alter ego and successor liability “incorporate a scienter [intent or knowledge of wrongdoing] component coupled with an analysis of similarities between the old and new entities.” The “notice of the obligation” by the new entity is key to successor liability. In McCleskey, liability for alter ego required more, however: “a fraudulent intent to avoid collective bargaining obligations.” The McCleskey opinion spells out the other key factors that courts consider.

Holding. First, the Court found that federal post-judgment standards of collection applied. Second, the Court concluded, “the district court was too quick to grant summary judgment” in the defendant’s (the son’s) favor.

Policy/rationale. In fact-sensitive cases like McCleskey, I find it best to defer to the Court’s opinion for any detailed application of the evidence to the law. Every case is different (and blog posts can only be so long….) Importantly, the judgment arose out of the plaintiff’s action under a collective bargaining agreement. For today’s purposes, the significant takeaway is that federal courts have their own body of law in this veil-piercing arena. Admittedly, the federal standards should never apply to a commercial mortgage foreclosure action, which cases are based on state contract and foreclosure law. Nevertheless, if you’re a party chasing money in federal court or defending a non-foreclosure collection claim in an Indiana federal forum, you should be mindful that the Indiana standards, about which I’ve written previously (see below), might not apply.

Related posts.

Indiana Collection Theories Of Piercing The Corporate Veil, Alter Ego, Successor Liability And Mere Continuation: Part I

Indiana Collection Theories Of Piercing The Corporate Veil, Alter Ego, Successor Liability And Mere Continuation: Part II
I have experience representing parties entangled in post-judgment collection actions. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at Also, don’t forget that you can follow me on Twitter @JohnDWaller or on LinkedIn, or you can subscribe to posts via RSS or email as noted on my home page.

Who Owes The Taxes After An Indiana Tax Sale, And When?

Lesson. As a tax sale buyer, be prepared to pay the real estate taxes that accrue in the year of the sale.

Case cite. Picket Fence v. Davis, 109 N.E.3d 1021 (Ind. Ct. App. 2018) (pdf)

Legal issue. Whether a tax sale buyer owes real estate taxes that accrue in the year of the sale.

Vital facts. The following chronology is important:

10/26/15: Treasurer’s Tax Sale
(The subject property did not sell because there was no “minimum bid.” Thus, the County acquired a lien on the property.)

4/8/16: County Commissioners’ Certificate Sale
(The property “sold,” meaning that the buyer purchased a “certificate” for the property.)

8/22/16: Petition for Tax Deed
(Following the submission of the required statutory notices, the buyer sought a court order for the issuance of a tax deed.)

9/26/16: Order for Deed
(The trial court directed the County to execute and deliver a tax deed to the buyer.)

Procedural history. Following the order for deed, a dispute arose between the buyer and the County regarding whether the buyer was responsible for real estate taxes accruing on or after January 2015, the year of the Treasurer’s Tax Sale. The trial court ruled in favor of the County. The buyer appealed.

Key rules. Indiana counties assess taxes each year, but those taxes do not become due and payable until May and November of the following year. For example, if in 2019 the Boone County Assessor determines that my wife and I owe $1000 in taxes for our home, the Boone County Treasurer will not collect the $1000 until 2020 (May, $500 and November, $500).

Another Indiana tax sale feature illustrated by Picket Fence is that, if a property does not initially sell for a statutory minimum amount, then the property slides to the county for a second tax sale, which does not require a minimum bid. The Court’s opinion describes this process in detail and includes summaries of the testimony of two experts that testified in the case.

The Indiana Court of Appeals rightly focused on the provisions in the tax sale statute [Indiana Code 6-1.1-25-4(f) and 4(j)] that specifically dealt with the payment of taxes by a sale purchaser. The Court explained why the “sale” referenced in those subsections refers to the Treasurer’s Tax Sale, and not the County Commissioners’ Certificate Sale, as it relates to when taxes should be payable by the new owner.

Holding. The Court of Appeals affirmed the trial court’s decision and concluded that the buyer must pay the real estate taxes that accrued the year of the Treasurer’s Tax Sale, including the taxes that accrued before the date of the County Commissioners’ Certificate Sale.

Policy/rationale. The buyer in Picket Fence argued that he should not be on the hook for the 2015 taxes due in 2016 or the first installment of the 2016 taxes due in 2017. The rationale for the buyer’s argument was that he did not actually become the owner until 2016. The County, on the other hand, asserted that the operative “sale” was the Treasurer’s Tax Sale in October of 2015 and that the buyer was thus obligated to pay the taxes that accrued in 2015. While I’m not entirely sure what’s ultimately fair here, the Court properly zeroed in on the key statutory sections and logically followed the language as written by the legislature. Of perhaps some solace to the buyer was that he did not owe any taxes due and payable in 2015 (the 2014 taxes). He only owed taxes that accrued in 2015, payable in 2016.

Related posts.


Mortgage loan servicers and title insurance companies sometimes engage me to handle tax sale-related disputes. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at Also, don’t forget that you can follow me on Twitter @JohnDWaller or on LinkedIn, or you can subscribe to posts via RSS or email as noted on my home page.