The Rooker-Feldman Doctrine Is Alive And Well In The 7th Circuit

In Banister v. U.S. Bank Nat'l Ass'n, 2021 U.S. App. LEXIS 28565 (7th Cir. 2021), the United States Court of Appeals for the Seventh Circuit (that includes Indiana) affirmed an Illinois district court's decision to dismiss on jurisdictional grounds a federal court lawsuit filed by a borrower/mortgagor.  The suit was the borrower's fifth attempt to overturn a state court judgment foreclosing the mortgage on her home.  The plaintiff borrower asserted the defendants committed bank fraud and sought $20MM in damages, together with an order to set aside the sheriff's sale due to the alleged "illegal foreclosure."  The borrower's claims were blocked by the Rooker-Feldman doctrine, which prohibits a federal court action to vacate a state foreclosure order.  To the extent the federal case sought damages, "a federal court could not award them without invalidating the foreclosure judgment—something that only an Illinois appellate court or the Supreme Court of the United States could do."

A recent opinion by the United States District Court for the Northern District of Indiana reached the same result.  Shaffer v. Felts, 2021 U.S. Dist. LEXIS 198114 (N.D. Ind. 2021) held that it "has no jurisdiction to set aside a state-court foreclosure judgment."  One of the lessens in Shaffer is that a federal court complaint "simply invoking the word 'fraud' does not grant a district court jurisdiction to set aside a state-court order."  The opinion cited to the 7th Circuit's 2015 Iqbal decision: 

The Rooker-Feldman doctrine is concerned not with why a state court's judgment might be mistaken (fraud is one such reason; there are many others) but with which federal court is authorized to intervene. The reason a litigant gives for contesting the state court's decision cannot endow a federal district court with authority; that's what it means to say that the Rooker-Feldman doctrine is jurisdictional.

I previously wrote about the Iqbal case here:  Dismissal Of Mortgagor’s Post-Foreclosure Federal Lawsuit: Usually, But Not Always.  

I represent lenders, as well as their mortgage loan servicers, entangled in loan-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.

What “Loss” Does An Owner’s Policy Of Title Insurance Cover?

Lesson. Title insurance generally covers “actual losses” arising out of the existence of a title defect, not losses from the conduct of the insured or personal dealings between people.

Case cite. Hughes v. First Am. Title Ins. Co., 167 N.E.3d 765 (Ind. Ct. App. 2021)

Legal issue. What “actual loss” arose from an undisclosed easement.

Vital facts. Owners purchased real estate and obtained a policy of title insurance from Title Company. Unbeknownst to Owners, the prior owners (sellers) had granted an easement across the entire south side of the real estate. After Owners learned of the easement, they submitted a claim to the Title Company, which acknowledged coverage for the easement that Title Company had not disclosed to Owners.

The subject title insurance policy covered against "actual loss, including any costs, attorneys' fees and expenses provided under this Policy." Such loss must have resulted from one or more of the enumerated covered risks, one of which was that "[s]omeone else has an easement on the Land." Title Company obtained an appraisal of the diminution in value of the real estate caused by the existence of the easement. The appraisal assigned a loss of $3,000. Owners would not accept that amount.

Meanwhile, Owners sued the easement holder to challenge the validity of the easement or, in other words, to terminate it. Apparently things got a little contentious in that dispute as Owners used “tire poppers” to try to block use of the easement. In the end, the case turned out poorly for Owners, and the court ordered Owners to pay $61,000 in attorney fees and costs to the easement holder.

Owners then sued Title Company seeking to recover losses from both the easement and the prior lawsuit, including reimbursement of the $61,000.

Procedural history. The trial court granted Title Company’s motion for summary judgment, and Owners appealed.

Key rules. An insurance policy is a contract and is subject to the same rules of construction as other contracts. “The purpose of title insurance is to insure that title to the property is vested in the named insured, subject to the exceptions and exclusions stated in the policy.”

“Title insurance is a contract of insurance against loss or damage caused by encumbrances upon or defects in the title to real estate.” Ind. Code § 27-7-3-2(a); see also Ind. Code § 27-7-3-2(g)(2) (defining "title policy" as "a policy issued by a company that insures or indemnifies persons with an interest in real property against loss or damage caused by a lien on, an encumbrance on, a defect in, or the unmarketability of the title to the real property").

In Indiana, the measurement of damages resulting from an easement is “the difference between the value of the property with the defect and the value of the property without the defect.” In other words, "actual loss is the diminution in value of the property caused by the easement."

Importantly, title insurance “does not insure against the conduct of the insured and does not cover matters involving personal dealings between individuals.”

Holding. The Indiana Court of Appeals affirmed the summary judgment in favor of Title Company. Owners were to be reimbursed for the actual loss suffered in reliance of the title policy, limited to the diminution in value caused by the existence of the easement ($3,000).

Policy/rationale. Owners contended that “loss” included the $61,000 arising out of the judgment in the suit against the easement holder because “it was a loss that resulted from a covered risk (i.e. the easement).” The Court rejected that argument: “the actual loss of the insured [here, Owners] is the difference in value of the property with the encumbrance [here, the easement] and its value without the encumbrance.” The Court reasoned:

Only title to the parcel was insured … not any actions [Owners] took to keep the easement holder from using the easement. Stated another way, the [61k] loss was not a result of the existence of the easement; rather, the loss [Owners] seek to recover is a result of their actions concerning the easement….

Although it was not a part of the Hughes opinion, depending upon the circumstances a title insurance company might fund—on behalf of its insured—a lawsuit to challenge the validity of an easement. Evidently that did not happen in Hughes, possibly because Title Company determined the easement was in fact valid.

Related posts.

Part of my practice includes litigation surround title insurance claims. 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.

American Banker: Small Banks, Credit Unions Warned To Brace For Pandemic Aftershock

Here is an article by Ken McCarthy and Jim Dobbs in the Community Banking section of the American BankerSmall banks, credit unions warned to brace for pandemic.

One of the interesting opinions featured in this piece is that problem loans may not surface until 2023, when many of us initially felt it would be a Fall 2020 issue.

I represent lenders, as well as their mortgage loan servicers, entangled in loan-related disputes. If you need assistance with such a , 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.


Judgment Requiring Payment Of Sum Certain Through Monthly Installments Until Paid Or “Until Death” Does Not Create Judgment Lien

Lesson. If the amount of a money judgment is contingent, then the judgment will not give rise to a statutory lien on the real estate of the obligor (or borrower).

Case cite. Harris v. Copas, 165 N.E.3d 611 (Ind. Ct. App. 2021)

Legal issue. Whether a divorce decree providing that Husband would pay Wife $75,000 in $500 monthly installments until paid in full or until Wife’s death constituted a money judgment entitling Wife to a lien against the marital home.

Vital facts. Husband and Wife divorced, and the decree provided, among other things, that Husband would become the sole owner of the marital home and that "[Husband] will pay [Wife] the sum of $75,000.00 at $500.00 a month starting June 15th 2017 until paid or death of [Wife].” The situation later became complicated for a variety of reasons, but for purposes of today’s post Wife contended that the divorce decree created a judgment lien on Husband’s real estate. She recorded a lis pendens notice against the marital home as part of her efforts to collect.

Procedural history. Husband filed a petition for, among other things, an order to dismiss the lis pendens notice. The trial court granted the petition and ruled that the contingent nature of the judgment “took it out of the purview of the judgment lien statute.” Wife appealed.

Key rules.

Indiana’s judgment lien statute (I.C. § 34-55-9-2) provides in relevant part:

All final judgments for the recovery of money or costs in the circuit court and other courts of record of general original jurisdiction in Indiana, whether state or federal, constitute a lien upon real estate and chattels real liable to execution in the county where the judgment has been duly entered and indexed in the judgment docket as provided by law[.]

Harris expressed that a “judgment for money is a prerequisite for the application of the judgment lien statute. A 'money judgment' is ‘any order that requires the payment of a sum of money and states the specific amount due, whether labeled as a mandate or a civil money judgment.’" Under Indiana law: "A money judgment must be certain and definite. It must name the amount due."

Holding. The Indiana Court of Appeals affirmed the trial court and held that Wife did not hold a statutory judgment lien on the marital home.  The holding necessarily included the dismissal of the lis pendens notice.  

Policy/rationale. Wife asserted that she held a $75,000 lien based upon the idea that the divorce decree constituted a money judgment against Husband that automatically created such lien. The Court disagreed, reasoning:

If the parties had simply agreed that [Husband] would pay [Wife] $75,000 in monthly $500 installments, there would be no dispute that [Wife] held a money judgment against [Husband]. However, the inclusion of the term "until paid or death of [Wife]" made the amount ultimately due to [Wife] unknowable and unascertainable because it could not be predicted when [Wife] would die. This is the antithesis of a statement of a "specific amount due" required of a money judgment.

The Court took the view that the divorce decree was not, in fact, a money judgment. It appears that the Court viewed the decree simply as a form of payment plan that, while enforceable, did not operate as the kind of judgment that could become a lien.

Related posts.


I represent judgment creditors and lenders, as well as their mortgage loan servicers and title insurers, entangled in lien priority 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.

7th Circuit: Absent “Concrete Injury” Plaintiffs Have No Standing To Bring FDCPA Claim

Lesson. Mere annoyance or intimidation by language in a demand letter, without any concrete harm resulting from such language, is insufficient for a plaintiff to have standing to file a FDCPA action.

Case cite. Gunn v. Thrasher, 982 F.3d 1069 (7th Cir. 2020)

Legal issue. Whether a true statement in a demand letter nevertheless injured the plaintiffs.

Vital facts. Plaintiffs owed their homeowners’ association $2,000. The HOA hired a law firm, which sent a demand letter to plaintiffs that contained this sentence:

If Creditor has recorded a mechanic’s lien, covenants, mortgage, or security agreement, it may seek to foreclose such mechanic’s lien, covenants, mortgage, or security agreement.

The HOA subsequently sued plaintiffs for breach of contract (damages) but not for foreclosure. The plaintiffs responded by filing suit against the HOA’s law firm in federal court under the Fair Debt Collection Practices Act (FDCPA). Although the plaintiffs conceded that the disputed sentence in the letter was both factually and legally true, they contended that the sentence was false and misleading because it would have been too costly to pursue foreclosure to collect the 2k debt.

Procedural history. The USDC for the Southern of Indiana dismissed the complaint on the basis that a true statement about the availability of legal options “cannot be condemned” under the FDCPA. Plaintiffs appealed.

Key rules. “Concrete harm” is essential for a plaintiff to have standing to sue in federal court. Article III of the Constitution “makes injury essential to all litigation in federal court.”

Holding. As a practical matter, the 7th Circuit agreed with the District Court. However, rather than affirming the District Court’s ruling on the defendant’s dispositive motion, the 7th Circuit remanded the case with instructions to dismiss for lack of subject matter jurisdiction.

    See also: Larkin v. Finance System, 982 F.3d 1060 (7th Cir. 2020) and Brunett v. Convergent Outsourcing, 982 F.3d 1067 (7th Cir. 2020). The 7th Circuit decided these two Wisconsin cases at the same time as Gunn and applied the same injury/standing rules.

Policy/rationale. The plaintiffs failed to allege or argue how the contested sentence in the demand letter injured them. Although they were annoyed and intimidated by the letter, that does not constitute a concrete injury. The Court reasoned:

Consider the upshot of an equation between annoyance and injury. Many people are annoyed to learn that governmental action may put endangered species at risk or cut down an old-growth forest. Yet the Supreme Court has held that, to litigate over such acts in federal court, the plaintiff must show a concrete and particularized loss, not infuriation or disgust. Similarly many people are put out to discover that a government has transferred property to a religious organization, but Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U.S. 464 (1982), holds that a sense of indignation (= aggravated annoyance) is not enough for standing.

My practice includes the defense of mortgage loan servicers in consumer finance litigation. 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 Supreme Court Affirms Denial Of Owner's Motion To Set Aside Tax Deed

Ind. Land Tr. Co. v. XL Inv. Props., LLC, 155 N.E.3d 1177 (Ind. 2020) is a thorough and definitive opinion by our state's highest court regarding whether a county auditor provided adequate notice to a landowner of an Indiana tax sale.  As is typical, these tax sale cases are fact sensitive and legally complicated, and frankly are difficult to summarize in a standard-size blog post.  Please read the entire opinion if you're confronted with a similar problem.  For purposes of today's post, I'll simply quote Justice David's introduction, which really says it all: 

Before the State sells a delinquent property, the Due Process Clause of the Fourteenth Amendment requires that the owner of the property be given adequate notice reasonably calculated to inform him or her of the impending tax sale. While actual notice is not required, the government must attempt notice in a way desirous of actually informing the property owner that a tax sale is looming. If the government becomes aware that its notice attempt was unsuccessful—such as through the return of certified mail—it must take additional reasonable steps to notify the owner of the property if practical to do so.

In this case, property taxes went unpaid on a vacant property from 2009 to 2015 resulting in over $230,000 in outstanding tax liability. The county auditor—through a third-party service—sent simultaneous notice of an impending tax sale via certified letter and first-class mail to the tax sale notice address listed on the deed for the property. The owner of the property, however, had moved from its original address several times and never updated its tax address for the property with the county auditor. The certified letter came back as undeliverable, but the first-class mail was never returned. After a skip-trace search was performed for a better address and notice was published in the local newspaper, the property eventually sold and a tax deed was issued to the purchaser. The original owner was ultimately notified of the sale when the purchaser filed a quiet title action and searched for a registered agent. The original owner then moved to set aside the tax deed due to insufficient notice.

The central question before our Court today is whether the LaPorte County Auditor gave adequate notice reasonably calculated to inform Indiana Land Trust Company of the impending tax sale of the property. As a corollary question, we also confront whether the Auditor was required under the circumstances of this case to search its own records for a better tax sale notice address when the notice sent via certified mail was returned as undeliverable. We find the Auditor provided adequate notice and was not required to search its internal records. We therefore affirm the trial court's denial of Indiana Land Trust's motion to set aside the tax deed.

The Court held that, under the facts of the case, the auditor "provided notice reasonably calculated, under all the circumstances, to apprise [the owner] of the pendency of the action and afforded them an opportunity to present their objections."  

See also:

My practice includes representing parties in connection with contested tax sales. 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.

7th Circuit: Communications Were Not “False, Misleading, Or Deceptive To The Unsophisticated Consumer” In Violation of the FDCPA

Lesson. Per the Seventh Circuit, “Congress did not intend the FDCPA to require debt collectors to cast about for a disclosure formulation that strikes a precise balance between providing too little information and too much. The use of an itemized breakdown accompanied by zero balances would not confuse or mislead the reasonable unsophisticated consumer.”

Case cite. Degroot v. Client Servs. 977 F.3d 656 (7th Cir. 2020)

Legal issue. Whether allegedly false or misleading statements by a collection agency violated the Fair Debt Collection Practices Act, 15 U.S.C. § 1692e, by using false, deceptive, and misleading representations or means to collect a debt, or 15 U.S.C. § 1692g by failing to disclose the amount of the debt in a clear and unambiguous fashion.

Vital facts. Debtor defaulted on credit card debt, and the credit card company assigned the debt to Collection Agency. The Debtor sued Collection Agency following a couple of collection letters Debtor received. (The opinion details the letters.) Debtor claimed that the second letter “misleadingly implied that [the credit card company] would begin to add interest and possibly fees to previously charged-off debts if consumers failed to resolve their debts with [Collection Agency].” Specifically, Debtor alleged that he was "confused by the discrepancy between the [letter 1’s] statement that 'interest and fees are no longer being added to your account' and [letter 2's] implication that [credit card company] would begin to add interest and possibly fees to the Debt once [Collection Agency] stopped its collection efforts on an unspecified date."

Procedural history. The District Court granted the Collection Agency’s motion to dismiss. Debtor appealed.

Key rules. The FDCPA requires debt collectors to send consumers a written notice disclosing "the amount of ... debt" they owe. 15 U.S.C. § 1692g(a)(1).

This disclosure must be “clear.” "If a letter fails to disclose the required information clearly, it violates the Act, without further proof of confusion."

"A collection letter can be 'literally true' and still be misleading ... if it 'leav[es] the door open' for a 'false impression.'"

“A debt collector violates § 1692e by making statements or representations that ‘would materially mislead or confuse an unsophisticated consumer.’"

Holding. The Seventh Circuit affirmed the District Court and held that the Collection Agency’s communications “were not false, misleading, or deceptive to the unsophisticated customer.”

Policy/rationale. The key issue in Degroot was whether Collection Agency, by providing a breakdown of the debt that showed a zero balance for "interest" and "other charges," violated §§ 1692e and 1692g(a)(1) by implying that interest and other charges would accrue if the debt remained unpaid. The Court set out the test it faced:

To determine whether [Collection Agency’s] letter was false or misleading, we must answer two questions. The first is whether an unsophisticated consumer would even infer from the letter that interest and other charges would accrue on his outstanding balance if he did not settle the debt. If, and only if, we conclude that an unsophisticated consumer would make such an inference, then we move to analyze whether the inference is false or misleading.

The Court reasoned that the itemization (debt breakdown) at issue could not be construed “as forward looking and therefore misleading”:

That interest and fees are no longer being added to one's account does not guarantee that they never will be, because there is no way—unless the addition is a legal or factual impossibility—to know what may happen in the future. That is why a statement in a dunning letter that relates only to the present reality and is completely silent as to the future generally does not run afoul of the FDCPA. While dunning letters certainly cannot explicitly suggest that certain outcomes may occur when they are impossible … they need not guarantee the future. For that reason, the itemized breakdown here, which makes no comment whatsoever about the future and does not make an explicit suggestion about future outcomes, does not violate the FDCPA.

My practice includes the defense of mortgage loan servicers in consumer finance litigation. 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.

Tips For Indiana Receivers, Updated

My practice includes representing receivers in commercial mortgage foreclosure cases.  Since we could see an uptick in commercial loan defaults this year, I thought I'd re-share a few tips related to receiverships over mortgaged real estate: 

1. Review and understand the proposed order appointing receiver before agreeing to serve.   Ask an attorney (like me) to review and help negotiate terms, as needed.  Receivers can be personally liable for certain conduct or damages, so you need to go into the job with your eyes wide open. 

2. Ensure your compensation is fair and profitable from the outset.  See #1.

3. Before the receivership hearing, eyeball the property – drive by and/or inspect if possible.  Understand the lay of the land.

4. Determine the plaintiff lender’s objectives with regard to the case and the property from the beginning:  babysit the property only, improve the property, sell the property, etc.?  Get a feel for the lender’s cost tolerance.  As a practical matter, the plaintiff lender is the captain of the ship. 

5. Once appointed:

    a.  Line up a receiver's bond immediately.

    b. Secure rents ASAP.

    c. Ensure that hazard insurance is current.

    d. Determine the status of real estate taxes and confer with the lender regarding any delinquency.  Develop a plan with the lender as to how and when taxes should be paid, if at all.  Send a confirming email and record the status/plan in court-filed reports.

    e. Investigate the status of utilities and consider action.

    f. Evaluate whether there is any non-real estate (personal property) collateral of value and, if so, learn what the lender wants you to do with it.  Ensure that the action is covered by prior court order, or obtain order authorizing the action.

6. Hire an attorney unless (a) you have prior experience with, and trust in, lender’s counsel and (b) there is no apparent adversity with the lender.  Some lawyers have the view that receivers should always retain independent counsel.  I don’t necessarily share that opinion and tend to assess the issue on a case-by-case basis.  Having said that, the trend is for receivers to have independent counsel, which probably is best.   

7. Report, report, report.  Inundate the lender’s representative and/or lender’s counsel with emails regarding significant issues and action.  Timely file all reports required by the order appointing receiver.  Full disclosure of operations is the best practice, especially if there are other creditors involved and/or an interested owner/borrower.  

8. As to major decisions affecting the property, including significant expenditures, obtain prior written approval from the lender or lender’s counsel.  See #7.  Emails are easy.  Use them.  Archive them for your file.

I represent parties involved with receiverships, including receivers themselves. 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 Supreme Court Clarifies Scope Of Trial Rule 9.2(A) Affidavits Of Debt

The hand wringing over certain pleading requirements for residential mortgage lenders and servicers seeking to enforce loans in Indiana is over effective July 15, 2021. This is because the Indiana Supreme Court amended Trial Rule 9.2(A) and specifically exempted mortgage foreclosures from the affidavit of debt requirements arising out of the 2020 amendment to the rule.

Click here for the Court’s order, which contains the amendment. The following link is to the entire rule on the Court’s system that, as of today, does not reflect the amendment: T.R. 9.2.

For background on this topic, please click on my two prior posts:

The rule’s new language ends any debate regarding whether the subsections added in 2020 [(A)1) and (A)(2)] apply to mortgage foreclosure actions. (Incidentally, the 2020 amendment never affected commercial or business loans – only consumer debts.)

Somewhat regrettably, the Court did not include language in this year’s amendment to exempt actions to enforce unsecured loans, such as an action on a guaranty or a credit agreement. Having said that, as noted in my prior posts, a strong argument can be made that the affidavits only apply to actions “on account” and not to loans.

Kudos to our Supreme Court for providing clarity to the situation and for the folks behind the scenes who lobbied for the change.
I represent lenders, as well as their mortgage loan servicers, entangled in loan-related disputes. If you need assistance with such a , 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.

Assignee Of Mortgage Loan Not Liable For Alleged TILA Violations

Lesson. Generally, an assignee of a residential mortgage (a subsequent mortgagee) is not subject to liability under TILA, 15 U.S.C. § 1641(e)(1), for violations that occur after the loan has been made.

Case citeCrum v. SN Servicing Corp., No. 1:19-cv-02045-JRS-TAB, 2020 U.S. Dist. LEXIS 172358 (S.D. Ind. Sep. 21, 2020)

Legal issue. Whether a defendant lender/mortgagee, an assignee of a loan, violated the Truth and Lending Act (TILA), 15 U.S.C. 1601, specifically Sections 1639f or 1638f.

Vital facts. Plaintiff Borrower obtained a residential mortgage loan in 1997. Subsequently, the loan was assigned to other lenders. In 2012, Borrower filed a Chapter 13 bankruptcy case and, per the Plan, made regular monthly payments to the Trustee. In 2018, the Trustee filed a report (1) certifying the amounts received from Borrower and (2) stating that Borrower had completed the case. However, a discrepancy existed between the Trustee’s final report and its earlier report detailing the “final cure payment.” Specifically, the inconsistency involved two payments of $455.61 that Borrower did not make to the Trustee. Based upon this discrepancy, the subject lenders, through their loan servicers, considered the loan to be delinquent and charged a series of late fees. Borrower, on the other hand, claimed that he fully performed under the BK Plan and made all required payments.

Procedural history. Borrower filed a complaint against several lenders and servicers, asserting numerous claims related to the lenders’ and servicers’ continued assessment of fees, including attorney fees and late charges. As it relates to this post, Borrower asserted that the servicer acting on behalf of one of the lenders/mortgagees (Lender) violated TILA by failing to provide periodic billing statements and by failing to promptly credit payments to the loan. The Lender moved to dismiss the claim against it under Rule 12(b)(6).

Key rules. 15 U.S.C. 1639f requires that "[i]n connection with a consumer credit transaction secured by a consumer's principal dwelling, no servicer shall fail to credit a payment to the consumer's loan account as of the date of receipt . . . ."

“Section 1638(f) requires a creditor, assignee, or servicer with respect to any residential mortgage loan to send the obligor periodic statements containing information such as the remaining principal, the current interest rate, a description of late payment fees, and specific contact information through which the obligor can obtain more information about the mortgage”.

Borrower’s TILA claim depended upon the Lender being “a creditor who may be sued under Section 1640(a) or an assignee who may be sued under Section 1641(e)(1).”

    A creditor is a person who both "regularly extends . . . consumer credit" and "is the person to whom the debt arising from the consumer credit transaction is initially payable on the face of the evidence of indebtedness or, if there is no such evidence of indebtedness, by agreement." 15 U.S.C. 1602(g).

    Assignee liability under TILA “is much more limited than creditor liability.”

In the context of a mortgage loan transaction, an assignee is liable for conduct for which a creditor would be liable only if (1) "the violation for which such action or proceeding is brought is apparent on the face of the disclosure statement" and (2) "the assignment to the assignee was voluntary." 15 U.S.C. 1641(e)(1). A violation is said to be "apparent on the face of the disclosure statement" where "(A) the disclosure can be determined to be incomplete or inaccurate by a comparison among the disclosure statement, any itemization of the amount financed, the note, or any other disclosure of disbursement; or (B) the disclosure statement does not use the terms or format required to be used by this subchapter." 15 U.S.C. 1641(e)(2).

    TILA does not define “disclosure statement,” but case law provides that the statement refers to the mandatory “disclosure of certain terms and conditions of credit before consummation of a consumer credit transaction." The bottom line is that “an assignee of a mortgage is not subject to liability under TILA for violations that occur after the loan has been made.”

Holding. The district court granted the motion to dismiss. Borrower did not appeal.

Policy/rationale. In Crum, the Lender did not originate the loan. As such, the Lender could not be a “creditor” under TILA because it was not the person to whom the debt was “initially payable on the face of the” promissory note.

The Lender was thus an “assignee,” but as assignee the Lender was not liable for the alleged TILA violations because the nature of the violations “would never appear on the face of the disclosure statement” as Section 1641(e)(1) requires. “By definition, such noncompliance would occur after any pre-transaction disclosures. Hence, [the Lender] cannot be liable as an assignee under § 1641(e)(1) for alleged violations of §§ 1639f and 1638(f).
I represent lenders, as well as their mortgage loan servicers, entangled in loan-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.




Washington, D.C. – Today, the Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac (the Enterprises) are extending the moratoriums on single-family foreclosures and real estate owned (REO) evictions until July 31, 2021. The foreclosure moratorium applies to Enterprise-backed, single-family mortgages only. The REO eviction moratorium applies to properties that have been acquired by an Enterprise through foreclosure or deed-in-lieu of foreclosure transactions. The current moratoriums were set to expire on June 30, 2021.

What Is A Replevin Action?

In Indiana, a cause of action for “replevin” will come into play if your lending institution collateralized its loan with tangible personal property and if your borrower defaulted on such loan.  For more on the fundamentals of a claim for replevin in Indiana, keep reading.

Vocabulary.  Black’s Law Dictionary defines replevin as follows:

An action whereby the . . . person entitled to repossession of [personal property] may recover [it] . . . from one who . . . wrongfully detains such [personal property].  Such action is designed to permit one having the right to possession to recover property in specie from one who has either wrongfully taken or detained property.

In this context, a lender is the person entitled to repossession of the property, and a defaulting borrower is the one who has wrongfully detained the property. 

Indiana statute.  Ind. Code § 32-35-2 governs replevin actions.  The detailed statute provides the procedural steps to repossess personal property.  Section 1 states that grounds for an action for replevin exist:

If any personal goods, including tangible personal property constituting or representing choses in action, are: 
(1) wrongfully taken or wrongfully detained from the owner or person claiming possession of the property; or
(2) taken on execution or attachment and claimed by any person other than the defendant;
the owner or claimant may bring an action for the possession of the property.

When lenders seek to enforce a security interest in, for example, a borrower’s equipment, counsel should include a count for replevin, which will result in a court order granting the right to repossess the equipment.  A count for replevin typically will be in addition to a count for damages based upon a promissory note/credit agreement.

Indiana case law.  Indiana judicial opinions provide further insight into replevin actions.  “To succeed on his claim for replevin, [plaintiff] must prove by a preponderance of the evidence that the [defendant] wrongfully held or detained property that belonged to him.”  Whittington v. Indianapolis Motor Speedway Foundation, Inc., 2008 U.S. Dist. LEXIS 62760 (S.D. Ind. 2008) (The Court determined, in a case involving an antique car, that the transaction was a gift, rather than a loan.  Because the plaintiff failed to prove that he had a possessory interest in the car, his claim for replevin failed.)  See also, Schaefer v. Tyson, 2009 U.S. Dist. LEXIS 4536 (S.D. Ind. 2009) (Replevin action dismissed by six-year statute of limitations.)  In McCready v. Harrison, 2009 U.S. Dist. LEXIS 1518 (S.D. Ind. 2009), Judge David Hamilton noted, generally, that:

  • “A replevin action is a speedy statutory remedy designed to allow one to recover possession of property wrongfully held or detained, as well as any damages incidental to the detention.”
  • Reasonable loss of use damages may be recovered in a replevin action; I.C. § 32-35-2-33 provides that judgments for plaintiffs in replevin actions may be for (1) delivery of the property, or the value of the property in case delivery is not possible and (2) damages for the detention of the property. 

To repossess and, ultimately, liquidate most non-real estate loan collateral in Indiana, asset-based lenders and their legal counsel need to be familiar with I.C. § 32-35-2 and the applicable case law.


I represent parties involved in disputes about loans. 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.

Impact of 1099-C Filing On Indiana Deficiency Judgments

Lesson. The filing of a 1099–C form (“1099-C”) does not, in and of itself, operate to extinguish a deficiency judgment under Indiana law. Ultimately, however, lenders should consult with their tax advisors to document, if necessary, that any issuance of a 1099-C following a sheriff’s sale was not the result on an intent to release a borrower (or guarantor) from the deficiency but rather a good faith effort to follow IRS rules and regulations.

Case cite. Leonard v. Old Nat. Bank Corp., 837 N.E.2d 543 (Ind. Ct. App. 2005)

Legal issue. Whether a lender’s issuance of a 1099-C as to its borrower cancelled the underlying debt so as to release the guarantor from liability.

Vital facts. A bank filed a 1099-C following its borrower’s bankruptcy case, which ended in a dismissal but not a discharge. (For more on 1099-C’s, click here.) It appears that the form pertained only to the borrower, not the personal guarantor of the loan, although the 1099-C dealt with the entire loan balance. Please note that Leonard did not involve a mortgage foreclosure. Also, the opinion did not mention whether the bank internally wrote off the debt. The bank in Leonard pursued the guarantor for the loan balance. In response, the guarantor asserted that the 1099-C cancelled the debt.

Procedural history. Following a bench trial that focused primarily on evidence of the bank’s intent, the court entered judgment for the bank and concluded that the bank did not extinguish the debt when it filed the 1099–C. The guarantor appealed.

Key rules. The Indiana Court of Appeals explained that the IRS requires a 1099–C to be filed after an “identifiable event,” which includes “a discharge of debt in bankruptcy, an agreement between the creditor and debtor, and a cancellation or extinguishment of the debt by operation of law that makes the debt unenforceable.”

Holding. The Court affirmed the trial court’s holding that the bank did not cancel the debt by virtue of the 1099–C.

Policy/rationale. The evidence showed that the bank’s filing was the result of the bank’s belief that the IRS required the form to be filed, but it was not an expression of the bank’s intent to discharge the debt.

Leonard appears to be the only Indiana appellate court opinion to address the 1099-C issue, which is to say that there is no Indiana case dealing directly with deficiency judgments following foreclosure sales. The holding is good for Indiana lenders because it definitively concludes that the mere filing of a 1099-C does not cancel a debt. Having said that, Leonard arguably leaves open the door for borrowers or guarantors, with appropriate evidence, to claim that their lender intended to cancel the deficiency by filing the form. In my view, a—or perhaps “the”—compelling factor will be whether the lender filed a satisfaction of judgment, which to my knowledge is the only way to formally terminate a deficiency judgment under Indiana law. Absent a satisfaction of judgment, the deficiency should not be extinguished by the mere issuance of a 1099-C.

Related posts.

Part of my practice includes representing judgment creditors and lenders, as well as their mortgage loan servicers, in connection with contested mortgage foreclosure 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.

Report: Surprise Plunge In Bankruptcies Puts Attorneys To Test

From yesterday's Indiana Lawyerarticle link.  The piece does not address consumer/residential foreclosure attorneys, but my understanding is that the story is the same and perhaps even worse due to the ongoing federal foreclosure moratorium.  Meanwhile, commercial foreclosures, which are not subject to a moratorium, also remain surprisingly low here in Indiana.              

Southern District Of Indiana Opinion Explains Why Federal Tax Liens Are Not Terminated In Bankruptcy

Lesson. A bankruptcy discharge can eliminate a tax payer’s personal liability for unpaid income taxes, but it will not extinguish a pre-existing tax lien on the tax payer’s real estate.

Case cite. United States v. Webb, 486 F. Supp. 3d 1238 (S.D. Ind. 2020) PDF

Legal issue. Whether federal income tax liens that attached to real estate belonging to bankruptcy debtors as of the date of the bankruptcy petition were unaffected by the bankruptcy.

Vital facts. The IRS filed notices of tax liens with the Hendricks County Recorder in 2010 against the Webbs related to certain tax assessments. The Webbs filed for bankruptcy in 2013, and one of the assets they scheduled was their residence. Later in 2013, the Webbs received a bankruptcy discharge. In 2014, the IRS mistakenly abated the tax assessments and mistakenly released the tax liens. The IRS corrected these mistakes in 2016 by reversing the abatement and filing revocations of the tax lien releases..

Procedural history. In this action before United States District Judge Hanlon, the USA, on behalf of the IRS, filed a motion for summary judgment to enforce its tax liens.

Key rules.

The Court noted that “a federal tax lien arises when ‘any person liable to pay any tax neglects or refuses to pay the same after demand.’” 26 U.S.C. § 6321.

Moreover, a “lien automatically ‘arise[s] at the time the assessment [of a tax] is made.’” 26 U.S.C. § 6322.

Such liens “attach to ‘all property and rights to property’ owned by the delinquent taxpayer during the life of the lien, 26 U.S.C. § 6321, and continue ‘until the liability for the amount so assessed . . . is satisfied or becomes unenforceable by reason of lapse of time.’” 26 U.S.C. § 6322.

Further, the Court in its opinion noted that prior federal courts have held that a taxing authority's existing lien upon property at the time of bankruptcy is not released or affected by the discharge. “Tax liens survive bankruptcy and may be enforced in rem even after the debtor has been discharged.”

Holding. The District Court granted the IRS’s summary judgment motion. The tax liens “remained intact.”

Policy/rationale. The Webbs asserted that the tax liens could not be reinstated because the tax assessments were discharged through bankruptcy. However, the discharge only extinguished one mode of enforcement, specifically an action against the Webbs for personal liability. The bankruptcy did not, however, disturb the in rem action against the Webbs’ real estate. In other words, the discharge terminated the underlying tax assessments against the Webbs individually but did not affect the right of the IRS to pursue relief for those assessment against the Webbs’ real estate. The Court emphasized the policy that federal tax liens have a “broad reach.”

The Court’s opinion discussed the Webbs’ other contentions concerning the mistaken releases and various bankruptcy-related matters. Please read the opinion if you have further interest in the Webb case.

Related posts.

My practice includes representing lenders, as well as their mortgage loan servicers, entangled in lien priority and title claim 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.

Absence Of Personal Jurisdiction Dooms Action To Domesticate Ohio Judgment In Indiana

Lesson. Domesticating an out-of-state judgment in Indiana is typically an easy and indefensible process, unless the original court lacked jurisdiction to enter the judgment in the first place.

Case cite. Ferrand Laser Screening v. Concrete Management, 150 N.E.3d 227 (Ind. Ct. App. 2020).

Legal issue. Whether a judgment creditor could domesticate and collect an Ohio judgment in Indiana.

Vital facts. Following construction-related litigation in Ohio, the judgment creditor (plaintiff) filed an action in Indiana against the judgment debtor (defendant) to domesticate and collect on the Ohio judgment. (Judgment Creditor also asserted claims against other defendants to pierce the corporate veil.)

Procedural history. Judgment Debtor filed a motion to dismiss the Indiana action on the basis that the judgment was not eligible for domestication because the Ohio court lacked personal jurisdiction. The trial court denied the motion. Judgment Debtor then filed a motion for summary judgment on the same basis that was denied. Following a bench trial, the court entered an order domesticating the Ohio judgment, and Judgment Debtor appealed.

Key rules. The Indiana Court of Appeals in Ferrand first noted that, under Indiana law, “a judgment of a sister state is presumed to be valid but is ‘open to collateral attack for want of personal jurisdiction or subject matter jurisdiction.’” Judgment debtors carry the burden of rebutting this presumption.

“In assessing a claim that a foreign judgment is void for lack of personal jurisdiction, [Indiana courts] apply the law of the state where the judgment was rendered.”

At issue in Ferrand were principles of “long-arm” jurisdiction from Ohio Revised Code 2307.382. (In Indiana, Trial Rule 4.4(A) governs long-arm jurisdiction.) Without going into detail, there are rules rooted in constitutional law that govern whether a court has personal jurisdiction (power) over an out-of-state defendant. To learn more, please read the opinion.

Holding. The Court held that the Ohio court lacked personal jurisdiction over Judgment Debtor and that the Ohio judgment was, accordingly, void.

Policy/rationale. The Court examined the evidence pertinent to the procedural issues and concluded that Ohio’s long-arm statute did not confer personal jurisdiction over Judgment Debtor. For purposes of this blog, an analysis of the technicalities is not altogether important. What is significant, however, is that a foreign judgment may not be automatically enforceable in Indiana. Although the underlying merits of the judgment cannot be attacked, judgment debtors still can defend the action on the basis that the foreign court lacked jurisdiction (power) to enter the judgment in the first place—assuming the circumstances as applied to the foreign court’s procedural law warrant such a defense.

As an aside, the Judgment Creditor in Ferrand did not avail itself of Indiana’s user-friendly (my term) statute to domesticate the Ohio judgment: Indiana Code 34-54-11. As noted below, I’ve written about this procedure previously. The Court in Ferrand did not mention this statute, and Judgment Creditor proceeded instead to file a new cause of action seeking a judgment to domesticate. I’m not here to say that was wrong—just that the parties, the trial court, and the Court of Appeals did not address it. I suspect the reason behind Judgment Creditor’s tactic was that its action was not limited to domestication but included separate claims against third parties that warranted a new lawsuit.

Related posts.

Part of my practice involves representing judgment creditors in their efforts to collect debts. 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.

Pre-Judgment Seizure of Property: Attachment Fundamentals

Can lenders seize property of a borrower or a guarantor to ensure its availability to satisfy a subsequent judgment?  Rarely.  I touched on this area of the law back on 3/6/07Woodward v. Algie, 2014 U.S. Dist. LEXIS 52997 (S.D. Ind. 2014) is an excellent opinion detailing the nuts and bolts of the remedy of attachment. 

The dispute.  The heart of the Woodward case was the plaintiff’s breach of contract claim against the defendant.  The contract involved the design and building of airplanes.  The plaintiff funded the project, and the defendant was on the production side.  The plaintiff alleged that the defendant failed to produce any planes, resulting in damages.  Following the filing of the complaint, the plaintiff filed a petition for a pre-judgment writ of attachment under Ind. Code § § 34-25-2-1(b)(4)-(6) seeking the seizure of the defendant’s property connected to the airplane project.

Attachment law, generally.  In Indiana, Trial Rule 64 and I.C. § 34-25-2-1 authorize pre-judgment attachment.  The Woodward opinion dealt only with statutory attachment, however.  Indiana’s statute requires plaintiffs to file an affidavit in support of any petition showing, (1) the nature of the claim, (2) that the claim is just, (3) the amount sought to be recovered and (4) one or more of the grounds for attachment in I.C. § 34-25-2-1(b).  Indiana law also requires plaintiffs to post a bond “with sufficient surety payable to the defendant, that the plaintiff will duly prosecute the attachment proceeding and pay all damages suffered by the defendant if the attachment proceedings are both wrongful and oppressive.”  See, I.C. § 34-25-2-5. 

Grounds - § (b)(4) – asset movement.  This statutory provision mandates that the plaintiff show the defendant was removing, or was about to remove, property outside of Indiana and was not leaving enough in Indiana to satisfy the plaintiff’s claim.  Plaintiff’s supporting affidavit in Woodward did not meet this requirement.  There was no basis for the Court to find that the defendant had or would have insufficient assets to satisfy the judgment sought by the plaintiff. 

Grounds - § (b)(5)-(6) – fraudulent intent.  These rules require the plaintiff to show that the defendant had sold, conveyed or otherwise disposed of, or was about to sell, convey or otherwise dispose of, executable property with the fraudulent intent to cheat, hinder, or delay the plaintiff.  Again, the Court in Woodward concluded that there was insufficient evidence of the alleged fraudulent intent.  “This Court cannot simply assume fraud on the part of the [defendant].”  I discussed establishing fraudulent intent, through Indiana’s “8 badges of fraud,” in my post dated 12/14/06

Property subject to attachment, and why.  The plaintiff in Woodward sought a writ of attachment against essentially all of the defendant’s property.  The Court viewed this as seeking an order for replevin, not attachment.  The attachment remedy "is available in an action for the recovery of money.”  Replevin actions, on the other hand, seek to recover property.  “The plaintiff must aver the amount of damages that he ought to recover, and the sheriff seizes only the amount of property, by value, to satisfy the plaintiff’s averred claim, beginning with personal property.”  One seeking a writ of attachment should not identify specific goods to be seized “because the purpose of attachment is only to ensure that property, any property, will be available to satisfy a money judgment; it is not to preserve the availability of specific items of property for recovery by the plaintiff.”  Because the plaintiff made no claim for replevin, but only money damages, the proposed remedy of seizing specific property of the defendant’s was inappropriate. 

Denied.  The Court denied the petition for prejudgment writ of attachment.  The plaintiff in Woodward failed to prove he was entitled to the relief.  The plaintiff also lost because he proposed an inadequate bond of only $2,500 and submitted no explanation of the calculation, despite seeking a judgment for $475,000.  A pre-judgment writ of attachment is very difficult to obtain in Indiana.  Allegations will not be enough, and concrete proof will be needed.  In my view, an evidentiary hearing, in contested cases, will be required before an Indiana judge will grant this extraordinary relief. 

My practice includes representing parties, including judgment creditors and lenders, in post-judgment collection proceedings. 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.

News Reports Regarding Increase In Foreclosure Activity Despite Government Programs

Both of the following news reports stem from the Q1 2021 Foreclosure Market Report by ATTOM Data Solutions:

I was out last week and have been playing catch-up.  I hope to post some new material next week.  


Title Work And Foreclosures In Indiana

One of the common themes on this blog has been the importance of obtaining title work in connection with an Indiana commercial mortgage foreclosure case.  If you’re wondering why your foreclosure counsel recommends that you incur the expense of a title commitment and later premiums for a title insurance policy, keep reading.

Procedural context.  Before the filing of the foreclosure complaint, certain steps should be undertaken to analyze the loan collateral, in this case the real estate.  One such step is to determine priority in title.  We strongly recommend that lenders order a foreclosure (title insurance policy) commitment.  (Tip:  If the lender has a prior title insurance policy related to the property, such as a lender’s policy, then you can save some expense simply by placing the order from the same company.  Or, a separate title insurance company may provide a cheaper commitment faster based upon a prior policy.) 

ID parties/priority.  The commitment should be reviewed for purposes of determining all parties with an interest in the real estate and their relative priorities.  I.C. § 32-29-9-1 articulates the necessary parties to be named in the suit.  The provision essentially requires that the plaintiff name such necessary parties to the suit in the same manner in which the person or entity’s lien or claim appears on the public records of the county where the suit is brought.  Service of summons upon such necessary parties is sufficient to make the court’s judgment binding as to those parties.  In order for there to be clear title secured at the sheriff’s sale, all parties with a recorded interest in the real estate need to be named in the lawsuit to answer as to their interests.  (Tip:  Also review the commitment to ensure that the legal description of the collateral in the commitment matches the legal description in the mortgage.)  An early priority determination will guide decisions as to settlement or workout negotiations, or whether to proceed with the foreclosure action in the first place.   

Update title work.  Normally, there will be a time gap between the date of the foreclosure commitment and the date of the filing of the complaint.  Conceivably, interests in the subject real estate could arise in this gap period.  For example, a mechanic’s lien could be filed, or the borrower could obtain a loan secured by a junior mortgage on the property.  It is thus critical to update or “date down” the title insurance policy commitment after the complaint is filed.  For more on this issue, see my December 21, 2006 post and House v. First American Title Company, 858 N.E.2d 640 (Ind. Ct. App. 2006), which held that a foreclosure action’s filing date is the “only relevant date used to determine the proper parties to a mortgage foreclosure.”   

Amend complaint.  Again, clear title cannot be obtained upon a sheriff’s sale unless all lien holders are named as defendants in the suit so that their interests can be foreclosed.  Should the updated title work disclose new lien holders, then such parties need to be added to the case by filing an amended complaint.  If no new interests are uncovered, then lenders can be comfortable proceeding with the original defendants named in the suit. 

No bona fide purchaser.  Third-parties who secure an interest in the mortgaged property after the filing of the foreclosure complaint do not need to be named as defendants in the action.  Lenders need not continuously search title during the course of litigation and worry about adding new parties to their foreclosure complaint.  “The only relevant date” is the foreclosure action’s commencement date – the day the lender filed the complaint.  Here’s what I wrote on December 21, 2006, which is particularly relevant in the wake of my October 4, September 25 and May 28, 2009 posts that touch upon Indiana’s bona fide purchaser doctrine:

Any party obtaining an interest in the property after the filing of the action will not be considered a bona fide purchaser without notice and thus will be bound by the foreclosure as if named as a party defendant to the foreclosure action.  (Such parties, upon learning of the suit, should intervene in the action to assert their rights to the property.)

Finish the job.  Arguably, the secured lender’s ultimate goal in its mortgage foreclosure action is to acquire title to (repossess) the real estate collateral free and clear of all liens.  This is why the commitment is important, as is the date down.  Lenders and their counsel should not forget the final step, however.  Once the lender obtains the sheriff’s deed (title) to the property, lenders are advised to purchase a title insurance (owner’s) policy.  Certainly the premium can be expensive, but in most commercial foreclosure cases the benefits of being insured (as free and clear title holder) far outweigh the costs.  For more insight into the wisdom of ordering an owner’s policy, please see my July 20, 2009 post.

In HAMP Case, Seventh Circuit Disposes Of Borrower’s Claims Of Wrongdoing

Lesson. It would seem to be extraordinarily challenging for a borrower to assert a viable claim against a lender arising out of a failed HAMP loan mod.

Case cite. Taylor v. JPMorgan Chase Bank, 958 F.3d 556 (7th Cir. 2020)

Legal issue. Whether Borrower’s claims for promissory estoppel, fraud, and intentional infliction of emotional distress should have been dismissed.

Vital facts. This is my third post about Taylor. See my March 11 and March 18 posts for background on this case, which centered on negotiations surrounding a potential loan mod under HAMP. To the Borrower’s chagrin, Lender did not ultimately grant the loan mod.

Among other things, Borrower pointed to language in the TPP indicating that Lender would modify the loan if Borrower qualified. Borrower also alleged that employees of Lender told him that his documents were "in receipt for processing" and that two other employees told him they had "received" his documents and were "forwarding" them. Basically, Borrower felt that he was misled and that Lender did not process the application in good faith.

Procedural history. The trial court granted Lender’s motion for judgment on the pleadings.

Key rules. “To hold [Lender] accountable under a theory of promissory estoppel, [Borrower] needed to allege that [Lender] made a definite promise to modify his loan.” An expression of intention or desire is not a promise.

A claim for fraud requires a misrepresentation about a past or existing fact. Indiana law does not support a claim based upon the misrepresentation of the speaker’s current intentions.

A claim for intentional infliction of emotional distress requires “extreme and outrageous” conduct.

Holding. Affirmed.

Policy/rationale. As to the promissory estoppel theory, the Court said that the statements at issue did not “convey a definite promise.” Indeed the commitment to modify “came with express strings” that were disclosed to Borrower.

Regarding the fraud claim, the Court found that the alleged misrepresentations “even if credited as entirely true,” could not “be construed as [Lender] committing to a permanent loan modification in the future.”

With respect to the action for intentional infliction of emotional distress, the Court didn’t buy the idea that the alleged conduct was extreme or outrageous. The Court followed the Indiana Court of Appeals decision in Jaffri (see HAMP post below): “‘any mishandling of’ HAMP by a loan servicer, ‘even if intentional,’ did not establish the tort of emotional distress because the HAMP applicant's options ‘would have been even more limited’ if the program were not in place.” That rationale carried the day in Taylor.

Related posts.

Part of my practice includes representing lenders, as well as their mortgage loan servicers, entangled in consumer finance 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.

Seventh Circuit Rejects Borrower’s HAMP Contract Breach Claim: Part 2 of 2

Lesson. Statements by Lender’s employees about the status of a HAMP loan modification, coupled with Lender’s acceptance of reduced payments during the period of negotiations, should not result in a waiver of the countersignature condition precedent.

Case cite. Taylor v. JPMorgan Chase Bank, 958 F.3d 556 (7th Cir. 2020)

Legal issue. Whether lenders waive the HAMP countersignature requirement through statements made by their employees and acceptance of borrowers’ reduced payments.

Vital facts. Today follows-up last week’s post, which I recommend you read for context: Seventh Circuit Rejects Borrower’s HAMP Contract Breach Claim: Part 1 of 2.

Borrower claimed that employees of Lender told him that Borrower’s loan mod document submissions were “in receipt for processing” and that they “did not know of” Lender ever returning fully-executed copies of TPP’s to customers (despite the contract requirement). Also, Lender accepted Borrower’s reduced payments during the application period.

Procedural history. The U.S. District Court for the Northern District of Indiana granted Lender’s motion for judgment on the pleadings and dismissed Borrower’s breach of contract claim.

Key rules. As mentioned last week, the Taylor opinion has an informative introduction to HAMP. If you’re not familiar with the program, please read the case for background.

In Indiana, “a party who benefits from a condition precedent can waive it.” The waiver does not have to be in writing but “can be inferred if the waiving party shows an intent to perform its obligations under the contract regardless of whether the condition has been met.”

Holding. The Seventh Circuit affirmed the district court’s order dismissing the contract claim.

Policy/rationale. The Court found that Borrower failed to allege any action on Lender’s part from which the Court could reasonably infer that Lender intended to proceed with the trial modification without a signature by Lender. First, the alleged statements by Lender’s employees did not promise eligibility. “[Borrower’s] discussions with bank personnel cannot reasonably be viewed as binding [Lender]—with no accompanying writing of any kind—to each of the terms and conditions otherwise part of the TPP or, by extension, any agreement for a permanent mortgage modification.”

Second, as to the interim payments, the Court reasoned:

By its terms, the TPP proposal made plain that [Borrower] would need to keep paying on his mortgage. More specifically, the TPP stated that [Lender] would accept the modified and reduced payments whether or not [he] ultimately qualified for permanent loan modification. Indeed, the Frequently Asked Questions document appended to the TPP application explained that if the bank found him ineligible for HAMP, [Borrower's] first trial period payment would "be applied to [his] existing loan in accordance with the terms of [his] loan documents." So [Lender's] decision to accept [Borrower's] trial period payments was not inconsistent with its intent to rely on the countersignature condition precedent and cannot establish waiver.

Because there was no agreement for a loan modification, there was no claim for breach in Taylor. But, remain mindful that the Court dismissed the case based upon the allegations in Borrower’s complaint. It’s conceivable that a different set of facts could have caused a different result. Having said that, the language in these HAMP and TPP documents is awfully clear in terms of what needs to happen before a HAMP loan mod will occur.

In my next post, I'll discuss Borrower's promissory estoppel theory.  

Related post.  Lender’s Acceptance Of Partial Payments Did Not Waive Default

My practice includes representing lenders, as well as their mortgage loan servicers, in connection with consumer finance litigation. 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.

Seventh Circuit Rejects Borrower’s HAMP Contract Breach Claim: Part 1 of 2

Lesson. Under Indiana law, if a lender or its loan servicer does not sign the proposed HAMP TPP agreement, then there is no binding contract.

Case cite. Taylor v. JPMorgan Chase Bank, 958 F.3d 556 (7th Cir. 2020)

Legal issue. Whether the borrower had a viable Home Affordable Mortgage Program (HAMP) breach of contract claim against his lender.

Vital facts. Today’s post relates to the borrower’s appeal of the district court’s decision, about which I discussed in 2018: Indiana Federal Court Dismisses Borrower’s Contract Claim Against Lender Because Lender Never Executed The HAMP Trial Period Plan.

Lender informed Borrower of a HAMP-related loan mod opportunity and sent him a proposed Trial Period Plan (TPP) to be signed and returned in order to start the process. The agreement stated that the trial period would not begin until both sides signed off and until Lender returned the signed agreement to Borrower. Borrower executed, but Lender never did. The loan was never modified. The reason Lender did not execute the agreement and modify the loan was that Borrower did not qualify.

Procedural history. Borrower sued Lender alleging that Lender failed to honor the loan modification offer. As it relates to this post, Borrower sued for breach of contract. Lender filed a Rule 12(c) motion for judgment on the pleadings for failure to state a claim. The U.S. District Court for the Northern District of Indiana granted the motion, and Borrower appealed.

Key rules. The opinion in Taylor contains a very helpful introduction to HAMP. If you’re not familiar with the program or the TPP, you should read the case.

In Indiana, to have an enforceable contract, the elements of offer, acceptance, and consideration must be present. “The agreement comes into existence when one party (the offeror) extends an offer, and the other (the offeree) accepts the offer and its terms.” However, an offer can be qualified or held in abeyance until a condition is fulfilled. This is known as a condition precedent. “If an offer contains a condition precedent, a contract does not form unless and until the condition is satisfied.”

Holding. The Seventh Circuit affirmed the district court’s order dismissing the contract claim.

Policy/rationale. The Court concluded as follows:

The TPP unambiguously stated that the trial modification would "not take effect unless and until both [Borrower] and [Lender] sign it and [Lender] provides [Borrower] with a copy of this Plan with [Lender’s] signature." And if [Lender] did "not provide [Borrower] a fully executed copy of this Plan and the Modification Agreement," then "the Loan Documents will not be modified and this Plan will terminate." This language is clear and precise and created a condition precedent that required Borrower to countersign the TPP and return a copy to Borrower before the trial modification commenced.

The Court’s rationale was that, since the TPP never came into effect, no contractual obligations were imposed on Lender. One of the underlying policies behind the decision was that there “were other constraints on Lender's consideration of Borrower's loan modification request—not the least of which were imposed by the federal HAMP guidelines—but none could arise from the unsigned, ineffective TPP proposal.”

My next post will address Borrower’s waiver theory.

Related posts.

My practice includes representing lenders, as well as their mortgage loan servicers, in connection with consumer finance litigation. 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.

Erik Chickedantz - Super, Indeed

The annual Indiana Super Lawyers magazine was delivered today.  It features a great article about Erik Chichedantz entitled "From Southwestern Indiana to West Point."  Click here for a .pdf, and credit to Super Lawyers Indiana 2021, page 7. 

Erik and I both grew up in Washington, and our families have a long history.  Erik's parents and my grandparents were close.  In high school, I worked at the local jewelry store with Erik's mother, Thelma, an absolute gem (no pun intended).

Erik was a Fort Wayne-based trial lawyer forever and since has become one of our state's best mediators.  As my Dad just said, Erik is one of a kind.  I'm proud to know him, and I thank him for his service to both our country and our profession.  

Indiana Reverses Controversial Recording Requirement

Title companies and many other parties routinely dealing with real estate transactions in Indiana are applauding Governor Holcomb’s signature of HB 1056 into law, which is effective immediately. The act reverses the recording law change on July 1, 2020, about which I wrote here.

Essentially, the so-called “proof witness,” previously required on recorded instruments, has been negated. Since July of last year, recorded documents such as mortgages and deeds needed two signatures and two notaries.  It was a pain, and now it’s over.


I represent parties involved in disputes about loans. 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.

Northern District of Indiana Court Dismisses Borrower’s FDCPA Claim Concerning Force-Placed Insurance Notices

Lesson. Force-placed insurance letters issued to a borrower following a Chapter 7 BK discharge generally should not violate the FDCPA.

Case cite. Mohr v. Newrez_ 448 F. Supp. 3d 956 (N.D. Ind. 2020)

Legal issue. Whether a mortgage loan servicer’s post-bankruptcy, force-placed hazard insurance notices to the borrower violated the Fair Debt Collection Practices Act (FDCPA).

Vital facts. Plaintiff borrower/mortgagor sue defendant servicer. Borrower had been discharged through a Chapter 7 bankruptcy. Borrower and servicer had agreed that servicer could foreclose on the subject real estate, and servicer (for the lender/mortgagee) filed the foreclosure action. Allegedly, “nothing was done to advance the foreclosure for six months.” While the foreclosure case was pending, the servicer sent the borrower three “warning letters” related to the expiration of borrower’s hazard insurance. Specifically, the letters informed borrower “that hazard insurance was required on his property, demand[ed] proof of insurance, and inform[ed] him that [servicer] would purchase hazard insurance for the property on his behalf and ultimately at his expense.” Two of the letters had language about the servicer being a debt collector but stated that, if the borrower were the subject of a bankruptcy stay, the notice was “for compliance and informational purposes only and does not constitute a demand for payment or any attempt to collect such obligation.”

Procedural history. The defendant filed a motion to dismiss the plaintiff’s complaint. The U.S. District Court for the Northern District of Indiana granted the motion. The borrower appealed to the Seventh Circuit, but the appeal was dismissed before any ruling.

Key rules.

The FDCPA “bans the use of false, deceptive, misleading, unfair, or unconscionable means of collecting a debt.”

The Court stated that “for the FDCPA to apply, however, two threshold criteria must be met. First, the defendant must qualify as a ‘debt collector[.]’” “Second, the communication by the debt collector that forms the basis of the suit must have been made ‘in connection with the collection of any debt.’” (quoting 15 U.S.C. §§ 1692c(a)–(b), 1692e, 1692g).

The opinion went on to tell us that “whether a communication was sent ‘in connection with the collection of any debt’ is an objective question of fact.” Having said that, “the FDCPA does not apply automatically to every communication between a debt collector and a debtor.” Further, the Act “does not apply merely because a letter bears a disclaimer identifying it as an attempt to collect a debt.”

The Seventh Circuit “applies a commonsense inquiry” into the question of whether a communication is “in connection with the collection of any debt.” The district court noted that the Seventh Circuit examines several factors, including:

whether there was a demand for payment, the nature of the parties' relationship, and the purpose and context of the communications—viewed objectively. None of these factors, alone, is dispositive.

Holding. The Court found that the three letters were not communications “‘in connection with’ the collection of a debt,” and thus did not fall “within the ambit of the FDCPA.”

Policy/rationale. The Court addressed each the factors involved in the “commonsense inquiry,” and for that detailed analysis please review the opinion. The Court also touched upon other published decisions across the country on the issue. The opinion is well-written and seems to suggest that the outcome may have been a tough call, particularly considering that it resulted in a dismissal of the complaint. Having said that, this quote from the opinion is pretty strong:

These letters notified plaintiff that insurance was required for the property, and that if he did not provide proof of insurance or obtain insurance himself, insurance would be obtained at his expense. The letters explained that it may be in plaintiff's interest to obtain his own insurance policy, and encouraged him to do so by identifying the ways in which force-placed insurance was not to his benefit. Viewed objectively, the letters were merely informational notices, explaining plaintiff's options.

Related posts.

My practice includes representing lenders, as well as their mortgage loan servicers, in connection with consumer finance litigation. 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.


Another Indiana Court Of Appeals Opinion Regarding Admissibility Of Lender’s Loan and Business Records

Lesson. A lender’s proposed witness who was not present when the original loan documents were executed, or for that matter when any materials relevant to the loan were created, does not in and of itself preclude the witness from testifying or prevent related exhibits from being admitted into evidence.

Case cite. Wells Fargo v. Hallie, 142 N.E.3d 1033 (Ind. Ct. App. 2020)

Legal issue. Whether the lender’s trial witness was competent to testify as to the admissibility of certain loan documents and records.

Vital facts. The lender filed a straightforward mortgage foreclosure action against the borrower claiming a default under the subject loan. The original lender had transferred the loan to the plaintiff lender.

Procedural history. The trial court held a bench trial on the lender’s complaint. The lender called one witness, who worked for the original lender and later the plaintiff lender in the default arena. The lender proffered as exhibits various loan documents and a payoff statement. The borrower objected to the admissibility of the exhibits, asserting that the witness was incompetent to authenticate the exhibits. The trial court granted the borrower’s objection as to all the exhibits but for the payoff statement. The court then entered a “judgment on the evidence” in favor of the borrower that disposed of the case. The lender appealed.

Key rules. Indiana Evidence Rule 803(6) – the business records exception to the hearsay rule – was at issue. In Indiana, the party offering a business record exhibit “may authenticate it by calling a witness ‘who has a functional understanding of the record keeping process of the business with respect to the specific entry, transaction, or declaration contained in the document.’” That witness is only required to have “personal knowledge of the matters set forth in the document,” but the witness “need not have personally made or filed the record or have firsthand knowledge of the transaction represented by it in order to sponsor the exhibit.”

Evidence Rule 902 deals with the admissibility of so-called “self-authenticating” documents. Among the self-authenticating documents listed in Rule 902 are of official records or documents recorded or filed in a public office as authorized by law, if the copies are certified in compliance with law, and commercial paper, to the extent allowed by general commercial law. This rule does not guarantee admissibility but relieves the proponent from the need to provide foundational testimony.

Holding. The Indiana Court of Appeals reversed the trial court and remanded the case for a hearing to allow the lender to proffer exhibits consistent with Indiana’s rules “without a heightened personal knowledge requirement.”

Policy/rationale. The Court of Appeals surmised that the trial court concluded that the lender’s witness “could not testify concerning any document generated in her absence,” such as business records of the organization or original loan documents. The Court rejected the notion of the trial court’s “near-blanket exclusion of exhibits.” The Court reasoned that the lender “should not be precluded from eliciting foundational testimony from a witness on grounds that the witness was not present at the time a document was created.” Moreover, properly-certified documents such as the recorded mortgage should have been admitted at trial without a witness. The same goes for the original promissory note endorsed in blank.

Related posts.


I represent parties involved in disputes about loans. 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.

Marion County (Indianapolis) Sales Disclosure Forms Effective 1/1/21

The Marion County Assessor’s Office is employing a new procedure for the completion of a sales disclosure form (SDF). This is relevant to the foreclosure process because parties pursuing sheriff’s sales in Marion County must tender SDFs as part of their pre-sale bid package.

For more on SDFs, see my prior posts:

Go to the Assessor’s system “Properly” to create the SDF. The Assessor circulated great step-by-step instructions for completing SDFs on line on Properly. Click here for those instructions.

I represent parties in connection with foreclosure cases and sheriff’s sales. 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.

2021 Marion County (Indianapolis) Sheriff's Sale Calendar, Procedure Reminders

The Marion County Sheriff's Office recently circulated its 2021 calendar, which sets out the relevant pre-sale and sale dates.  Click here for the Excel spreadsheet issued by the Sheriff.  The Office reminded parties that, through March, the sales will be on Friday in Room T230 of the City/County Building.  

One universal takeaway from Marion County's schedule is that all Indiana counties, by statute, must follow certain basic steps in order to properly tee up a sale.  Although each particular county will have its own sale dates and slightly different pre-sale deadlines, all counties will have (1) a cutoff date to file a praecipe for sale in order to meet a future sale date, usually about two months down the road, (2) a deadline for the submission of notices of sale, (3) an advertising/publication period, and (4) a deadline for the so-called bid package, which includes the sale-related documents and any costs/fees.   

Although I've said this before here, it's worth repeating:  while the Indiana Code covers the fundamentals of the sheriff's sale process, the specific rules and procedures vary by county.  There are 92 counties in Indiana and therefore 92 different sets of customs and practices applicable to sheriff's sales.  My advice is to call the local civil sheriff or visit sheriff's website to confirm the hoops through which you must jump, and when, to start and finish a successful sheriff's sale.

Happy New Year,


Indiana Commercial Court Expanding, Succeeding

I attended a continuing ed webinar last week related to the recent-announced expansion of Indiana's commercial court system.  Effective January 2021, there will be four new counties in the program.  There will now be ten counties (and ten judges) total.  For interest lawyers, there are a handful more CLE's upcoming about the new judges and the system generally.

I first wrote about this new specialized court in June 2016:  Indiana Commercial Court Pilot Project And Interim Rules.  One thing I learned during the CLE was that the court has a website/database with a search function that allows you to research commercial court decisions:  Commercial Court Document SearchClick here for the court's rules, which I've added permanently to the right side of my home page.        

I would recommend utilizing the court for most commercial foreclosure cases or business loan disputes.  In my opinion, the specialized system has been a really good thing for Indiana.  Kudos to our Supreme Court for implementing this change and to the judges who have embraced it.  

Indiana Supreme Court Suspends All Jury Trials Until 3/1/21

Click here for today's Order Suspending Jury Trials entered by our state's high court.  The Indiana Lawyer reported on this development, and you can read the article here.  

For more on this topic, see my June post:  Indiana Supreme Court's 5/29/20 Order Extending Its 3/16/20 Order Related to COVID Relief And Procedures 

Indiana Court of Appeals Mortgage Foreclosure Opinion, III of III: Damages Evidence After Lenders Merge

Lesson.  Even if the original lender no longer exists due to a merger, as long as the proper foundation is laid, the necessary liability and damages evidence should be admissible based upon the business records exception to the hearsay rule.

Case cite.  Hussain v. Salin Bank, 143 N.E.3d 322 (Ind. Ct. App. 2020)

Legal issue.  Whether a 41-page damages exhibit offered into evidence by the plaintiff lender was inadmissible hearsay.  More specifically, the question was whether the lender’s witness “lacked the knowledge to lay an adequate foundation for the admissibility of the documents under the business records exception to the hearsay rule.”  The borrowers challenged the testimony of the operative based upon the fact that their original lender had merged into the plaintiff lender.

Vital facts.  Please click here for my first post and here for my second post about Hussain, which was a straightforward mortgage foreclosure action. 

Procedural history.  Following an evidentiary hearing on damages, the trial court granted judgment for the lender for about 243k.  The borrowers appealed.   

Key rules.

Similar to last week, today’s piece addresses Indiana Evidence Rule 803(6)’s business records exception to the hearsay rule.  Last week dealt with a summary judgment affidavit and attached exhibits.  Today’s post concerns the testimony of a live witness and the so-called evidentiary “foundation” to get certain exhibits into evidence.  In Indiana:

[u]nder the business records exception, “a person who has a familiarity with the records may provide a proper business records exception foundation even if he or she is not the entrant or his or her official supervisor.”  To obtain admission under the business records exception, the proponent of an exhibit need only call an individual who has a functional understanding of the business's record-keeping process.  This could be the entrant, the entrant's supervisor, co-workers, a records custodian or any other such person.

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

Policy/rationale.  The borrowers contended that the lender’s damages witness was not qualified to lay the foundation for admission of the damages exhibits because he worked for the plaintiff lender’s predecessor and not directly for the plaintiff.  Among other points, the borrowers relied upon the Holmes decision related to credit card debt, about which I wrote on 1/13/19.  The Court distinguished Hussain from Holmes, however: 

Unlike the circumstances in [Holmes] where the [witness was] attempting to lay a foundation for the records of another business that had sold its accounts, [the witness here] was testifying on behalf of a company for whom he worked that had merged with another.  As [the original lender] no longer exists, [the successor lender] is vested with all the rights, duties and records that previously were [the merged lender’s] under Indiana corporate law. 

Just as importantly, the evidence in Hussain established that the subject loan had been integrated into the plaintiff lender’s software system, about which the witness had personal knowledge.  Among other things, the witness testified that, with respect to the debt, “he personally [ran] the numbers based upon the payments that were made on [the borrowers’] loan and determined that the amount due was consistent with what was reflected in the bank's documents.”  The Court ultimately agreed with the trial court that the witness laid the proper foundation for the damages exhibits under the business records exception to the hearsay rule.

Related posts. 


I represent parties involved in 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 Court of Appeals Mortgage Foreclosure Opinion, II of III: Liability – Evidence Teachings

Lesson.  In contested motions for summary judgment, lenders should not forget to point to the entire record before the court.  Often borrowers will have admitted key facts in their pleadings or offered detrimental evidence themselves while trying to defend certain elements of the case.

Case cite.  Hussain v. Salin Bank, 143 N.E.3d 322 (Ind. Ct. App. 2020)

Legal issue.  Whether the affidavit in support of the lender’s motion for summary judgment constituted inadmissible hearsay. 

Vital facts.  Please click here for my first post about Hussain that contains some background.  In addition to the “first to breach” argument discussed in that post, the borrowers defended the mortgage foreclosure action on evidentiary grounds.  The plaintiff lender had merged with the original lender.  In support of its summary judgment motion, the lender tendered an affidavit from an employee of the current lender who had also served as a records custodian of the original lender. 

Procedural history.  The trial court granted summary judgment for the lender on liability but ordered a trial on damages.  This post relates to the summary judgment ruling on liability.   

Key rules.

    General ruleIndiana Trial Rule 56(E) controls the admissibility of summary judgment affidavits and prohibits hearsay while requiring personal knowledge.  Indiana Evidence Rule 801 defines hearsay, which generally means on out-of-court statement offered for the truth of the matter asserted.    

        An exception.  The Court specifically pointed to language in T.R. 56(E) precluding exhibits “not previously self-authenticated….”  In Indiana, “once evidence has been designated to the trial court by one party, that evidence is deemed designated and the opposing party need not designate the same evidence.”

        Another exceptionInd. Evid. R. 803(6) is the business records exception to the hearsay rule.  (There are many, many exceptions to the hearsay rule.)

Holding.  The Court of Appeals affirmed the trial court’s summary judgment on liability.

Policy/rationale.  The borrowers argued that the lender’s affidavit was based upon inadmissible hearsay and that, without the affidavit, the lender failed to prove a default under the loan.  One of the legal bases of the borrowers’ argument was the Court of Appeals’ holding in the 2019 Zelman case, about which I wrote here, which reversed a trial court’s summary judgment due to a flawed affidavit.  The Court in Hussain was not persuaded by the borrowers’ argument and distinguished its holding in Zelman as follows:

Unlike [Zelman], the [affiant/witness in Hussain] was not an employee of a third party who had purchased the [borrowers’] debt.  He was an employee of [the current lender] that had merged with [the prior lender].  [The witness] was the custodian of the records for [the prior lender], and the designated evidence established that he had acquired knowledge of the [borrowers’] debt by personally examining the business records relating to their loan.  Moreover, [the witness] did not refer to unspecified business records as did the affiants did in … Zelman.  Instead, [his] affidavit specifically identified the promissory note and mortgage to which he referred.

Of equal importance to the outcome in Hussain was the fact that many of the key documents referenced in the affidavit were already of record in the case and thus had been authenticated by the borrowers themselves. 

Therefore, notwithstanding any alleged flaws in [the lender’s affidavit], the [borrowers] admitted that they executed the note and mortgage, along with their failure to pay.  And that evidence was already before the court.  The [borrowers] further admitted that they made payments on the note and they submitted their payment history as part of the designated evidence.  That history demonstrated that they had not made a payment since November 27, 2015, yet the note required payments through September 16, 2023.  That evidence was not disputed, and it established all the required elements for a mortgage foreclosure.  For all these reasons, the trial court did not err in admitting [the] affidavit into evidence.

Related posts. 


I represent parties involved in 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.

Recent Indiana Mortgage Foreclosure Opinion, Post I of III: Liability – First Material Breach Doctrine

Lesson.  Indiana’s “first to breach” defense would appear to be an exceedingly difficult theory for borrowers to establish in most foreclosure cases. 

Case cite.  Hussain v. Salin Bank, 143 N.E.3d 322 (Ind. Ct. App. 2020)

Legal issue.  Whether the lender was precluded from foreclosing based upon its alleged contract breach, which purportedly occurred before the borrowers’ default.

Vital facts.  Hussain involved a typical mortgage loan.  The promissory note had a 15-year term and was secured by the borrowers’ real estate.  From the outset, the borrowers struggled to make payments, and the lender assessed a series of non-sufficient funds fees and late fees.  The loan ended up in the borrowers’ Chapter 13 bankruptcy case that was later dismissed.  The lender then pursued a state court mortgage foreclosure action and filed a motion for summary judgment in the case.

The liability (loan default) aspect of the action surrounded the so-called “first to breach” rule.  Specifically, the borrowers tendered an affidavit stating that the lender (not the borrowers) initially breached the promissory note by assessing a $20 NSF fee to the principal due on the loan.  The borrowers had bounced a check due at the closing of the loan.  Nonetheless, the borrowers contended that the NSF fee amounted to a “unilateral, unauthorized alternation in the terms of the Note by [the lender].”

Procedural history.  The trial court granted summary judgment for the lender on liability.

Key rules.

The Court in Hussain outlined Indiana’s elements for a prima facie case for the foreclosure of a mortgage: 

(1) the existence of a demand note and the mortgage, and (2) the mortgagor's default….  Ind. Code § 32-30-10-3(a) provides that “if a mortgagor defaults in the performance of any condition contained in a mortgage, the mortgagee or the mortgagee's assign may proceed ... to foreclose the equity of redemption contained in the mortgage.”  To establish a prima facie case that it is entitled to foreclose upon the mortgage, the mortgagee or its assign must enter into evidence the demand note and the mortgage, and must prove the mortgagor's default….  Once the mortgagee establishes its prima facie case, the burden shifts to the mortgagor to show that the note has been paid in full or to establish any other defenses to the foreclosure.

The Court cited to Indiana’s “first material breach doctrine,” which provided:

When one party to a contract commits the first material breach of that contract, it cannot seek to enforce the provisions of the contract against the other party if that other party breaches the contract at a later date….  Whether a party has materially breached an agreement is a question of fact and is dependent upon several factors including:

(a) The extent to which the injured party will obtain the substantial benefit which he could have reasonably anticipated;

(b) The extent to which the injured party may be adequately compensated in damages for lack of complete performance;

(c) The extent to which the party failing to perform has already partly performed or made preparations for performance;

(d) The greater or less hardship on the party failing to perform in terminating the contract;

(e) The willful, negligent or innocent behavior of the party failing to perform;

(f) The greater or less uncertainty that the party failing to perform will perform the remainder of the contract.

Holding.  The Court of Appeals affirmed the trial court’s summary judgment as to liability.

Policy/rationale.  The Court first pointed to language in the note about how payments are to be applied:  “payments are first to be applied to any accrued unpaid interest, then to principal, and then to any unpaid collection costs.”  The Court reasoned: “the note provides that collection costs will be assessed to the [borrowers], and they do not dispute that the NSF fee is a collection cost.”  Further, the lender had established that it performed its obligations under the loan by funding the principal at closing.  “The $20 NSF fee in no way prevented [the borrowers] from obtaining the benefit of the loan.”  Even more, the evidence established that it was the borrowers who breached by failing to make the initial payment due under the loan and that there was no evidence the lender “committed a material breach of the loan prior to that time.” 

I suspect that, at the trial court level, the proceedings were more involved with regard to the minutia surrounding the theoretical applicability of the “first to breach” rule, but in the end the Court of Appeals was having none of it.  The meatier parts of the Hussain opinion deal with the issues of damages and evidence, and I will address those matters in the coming days. 

Have a great Thanksgiving.  

Related posts.  


I represent parties involved in 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.

“Economics Of The Transaction” Establish Land Contract Rather Than Lease

Lesson. When determining whether a real estate agreement is a lease or a land sale contract, follow the money.

Case cite. Vic’s Antiques v. J. Elra Holdingz, 143 N.E.3d 300 (Ind. Ct. 2020)

Legal issue. Whether an agreement was a lease (subject to an eviction remedy) or a land sale contract.

Vital facts. Elra, as the owner, and Vic’s, as either the purchaser or the tenant, executed a “Lease Agreement” for a building and 3+ acres of real estate. Vic’s agreed to pay $1,265.30/month for twenty years with an option to purchase the property for $1.00 at the end. The opinion details the terms and conditions of the agreement. The language of the contract controlled the outcome – not testimony or any other documents. Of paramount importance were “the economics of the transaction.”

Procedural history. About a year after the signing of the agreement, Elra filed an eviction action against Vic’s based, not on a payment default, but on other breaches related to the maintenance and condition of the property. The trial court ruled in Elra’s favor and ordered Vic’s to vacate the property. Vic’s appealed.

Key rules. In Indiana, “the transaction's purported form and assigned label do not control its legal status.” Therefore, “to determine whether the agreement is a lease or a land sale contract, [Indiana courts] look beneath the surface of the agreement and … consider the substance of the agreement to determine the intent of the parties.”

“'In effect,' a land sale contract is 'a sale with a security interest in the form of legal title reserved by the vendor' and that the 'retention of the title by the vendor [owner] is the same as reserving a lien or mortgage.' In other words, in a land sale contract, the vendor retains legal title to the real estate until the vendee pays the total contract price. And … a land sale contract is ‘in the nature of a secured transaction.’”

The Court also looked to the UCC for help in making its decision as “essentially the same rules which distinguish a lease from a sale under the UCC apply….”

Holding. The Indiana Court of Appeals reversed the trial court and concluded that the agreement was a land contract, which could not give rise to an eviction.

Policy/rationale. The Vic’s opinion is excellent in terms of how the Court relies upon and analyzes the financial aspects of the deal. Vic’s is a valuable resource for parties or counsel on the origination side of such deals and on the back-end enforcement of them. Although the facts are dense, there is a road map within the case about how to create a land contract or how to create a lease with an option to buy so as to avoid land contract status—depending upon your objectives. This case, together with the Indiana Supreme Court’s decision in Rainbow Realty (link to my 8/22/20 post here), have really helped define this area of Indiana law over the last couple years.

The Court’s comments below capture the essence of its overall rationale, which zeroed in on the “economics” of the deal:

In addition, in order to exercise its $1.00 “option to purchase,” Vic's must first have paid a sum equal to 240 monthly payments of $1,265.30, or a total of $303,671.63, which is $103,671.63 more than the purchase price. Elra has failed to account for this additional payment. A simple calculation confirms that this amount represents interest on the $200,000 purchase price.

Amortization is the payment of a debt with interest over time. The agreement provides for the amortization of $200,000 in principal payable in 240 monthly payments of exactly $1,265.30. Solving for the interest rate yields a rate of 4.5%. This amortization is the Rosetta Stone that unpacks and reveals the nature of the agreement. All four of these factors—the principal amount, the number of monthly payments, the amount of each monthly payment, and the interest rate—are integral to the amortization schedule, and each factor depends upon the others.

Interest represents the time value of money. While contract purchasers pay interest on the unpaid principal balance of a land sale contract, lessees do not pay interest on future rent payments. Here, the four factors comprising the amortization show that the monthly payments were not “rent payments” but contract payments of principal and interest on a fully amortized land sale contract.

The Court concluded that, although the contract “contains terms that are consistent with a lease, it is clear from the economics of the transaction that from the outset the parties intended for Vic's to acquire the option property. Accordingly, we can say with confidence that the agreement … is a land sale contract.”

Note: I regret that the opinion in Vic’s did not address the remedy available to Vic’s: foreclosure vs. forfeiture. The Court was on a roll, and the remedy aspect of land contract cases can be just as complicated as determining whether the agreement is or is not a land contract to begin with. Alas, that issue was not ripe for a ruling, and the early termination of the contract weighed heavily in favor of forfeiture anyway.  

Related posts.

Part of my practice involves handling real estate and loan-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.

Bank Loses 100k After Failing To Appear At Garnishment Hearing To Prove Right Of Set-Off

Lesson. A bank, as a garnishee-defendant, may claim a right to set-off funds on deposit against amounts its customer owes the bank. However, the bank should appear in court and prove its right. Merely asserting set-off in answers to interrogatories could waive the bank’s claim and result in a loss of the funds.

Case cite. Old Plank Trail Community Bank v. Mattcon General Contractors, 137 N.E.3d 308 (Ind. Ct. App. 2019)

Legal issue. Whether Bank preserved its right to a set-off of the amounts owed under a garnishment order.

Vital facts. In December 2018, a judgment in the amount of $162,178.95 was entered against defendant, Burrink, in favor of plaintiff, Mattcon. In January 2019, Mattcon initiated proceedings supplemental and sought the garnishment of Burrink’s deposit accounts at Bank. Bank, as garnishee-defendant, answered Mattcon’s interrogatories and identified two accounts with $97,944.07 on deposit. The answers went on to state “Bank has claimed set-off rights as past loans due to Bank.” However, Bank provided no documents to support the set-off, and Bank did not attend a hearing on the court’s order to appear. The trial court determined that Bank “waived any defenses as to garnished funds” and entered a final order in garnishment that required Bank to turn over the $97,944.07 to Mattcon.

Procedural history. The trial court ruled that Bank waived its right to set-off the garnished funds. Bank appealed.

Key rules. A garnishment proceeding “is a means by which a judgment creditor seeks to reach property of a judgment debtor in the hands of a third person, so that the property may be applied in satisfaction of the judgment.” A judgment creditor “has the initial burden of proving that funds are available for garnishment.” The burden then shifts to the garnishee-defendant to “demonstrate a countervailing interest in the property or assert a defense to the garnishment.”

A depositary bank generally “has the right of set-off after receipt of notice of garnishment.” However, that right of set-off can be waived. Waiver means “the voluntary relinquishment of a known right.” The “silence or failure to act will not constitute waiver unless the holder of the right fails to speak or act when there is a duty to speak or act.”

Holding. The Indiana Court of Appeals, guided by the lofty “abuse of discretion” standard, affirmed the trial court’s final order in garnishment.

Policy/rationale. Bank contended that, even though it did not attend the proceedings supplemental hearing, the interrogatory answers provided adequate notice of the set-off rights and, in turn, permitted Bank to set-off any amounts owed after Bank received notice of the garnishment proceedings. The Court refused to reverse the trial court’s decision related to Bank’s “potential” right to set-off:

[Bank] failed to include or reference any relevant loan documents, payment histories, statements of outstanding balances, or notices of default that would support its claimed set-off rights. Moreover, [Bank] had the duty, knowledge, and opportunity to present and prove the claimed defense to garnishment at the February 8 hearing. It failed to do so, despite the trial court's order that the claims or defenses were to be presented at the time and place of the hearing.

While the result seems a little harsh, the system is set up to be deferential to the trial court, which conducted the proceedings first-hand. Bank didn’t quite do enough to protect its interests here.

Related postSet-Off Versus Garnishment: Rights To And Priorities In Deposit Accounts
My practice includes representing parties, including judgment creditors and lenders, in post-judgment collection proceedings. 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.

U.S. Supreme Court: FDCPA Statute Of Limitations

The Supreme Court of the United States, in Rotkiske v. Klemm, 140 S.Ct. 355 (2019), held that the Fair Debt Collection Practices Act's one-year statute of limitations "begins to run on the date on which the alleged FDCPA violation occurs, not the date on which the violation is discovered."  15 U.S.C. 1692k(d)   Justice Thomas authored the opinion, which strictly construes the statutory text.  The Court "simply enforce(d) the value judgments made by Congress" and declined to build the so-called discovery rule into the statutory provision.    

Wife Was A “Creditor” In Alleged Fraudulent Transfer Case And Proved The Necessary Fraudulent Intent To Prevail Over Husband In Divorce Case

Lesson. Dumping real estate assets for no value shortly before a judgment, even in a divorce case, could lead to a court order unwinding the transfers under Indiana’s UFTA.

Case cite. Hernandez-Velazquez v. Hernandez, 136 N.E.3d 1130 (Ind. Ct. App. 2019)

Legal issues. Whether a wife was a “creditor” under Indiana’s Uniform Fraudulent Transfer Act? Whether the subject transfers violated the UFTA?

Vital facts. This dispute arises out of a divorce and involves the husband (Husband), the wife (Wife), the husband’s brother (Brother), and the Brother’s longtime girlfriend (Girlfriend). In connection with a decree of dissolution, there was a property division in which Wife was to receive certain parcels of real estate. Although the facts are pretty dense, in a nutshell, shortly before the divorce was to become final, Husband conveyed a bunch of real estate to Girlfriend.

Procedural history. The trial court set aside the conveyances based upon the UFTA. Husband appealed.

Key rules. Ind. Code § 32-18-2-14 sets out how a transfer becomes voidable under Indiana’s UFTA. One key inquiry is whether the transfer was made with the “intent to hinder, delay, or defraud” the creditor.

I’ve written about the test for “fraudulent intent” and the so-called “eight badges of fraud” previously.   

The UFTA defines a “creditor” as “a person that has a claim.” I.C. § 32-18-2-2.

Holding. The Indiana Court of Appeals affirmed the trial court ruling in favor of Wife.

Policy/rationale. Husband first contended that Wife was not a creditor because Brother financed the purchase of the subject real estate from Husband and had the right to direct to the conveyances to Girlfriend. However, the evidence showed that Wife contributed to the original purchases of the real estate, which, in part, had been titled in Wife’s name. The Court concluded the properties were part of the marital estate for purposes of the divorce, thereby rendering Wife a “creditor.”

Husband next argued that the transfer of real estate from Husband to Girlfriend was not made with the “intent to hinder, delay, or defraud” Wife. The Court addressed Indiana’s law of fraudulent intent and found that at least five of the eight badges of fraud were present:

First, the record shows that Husband transferred the properties to [Girlfriend] approximately one month before Wife filed for divorce and when the parties' relationship had already begun to deteriorate. Second, the transfer of these properties greatly reduced the marital estate because the rental properties were substantially all of the family's assets. Third, there is evidence that Husband would retain some benefits over the rental properties. That is, Husband, [Brother], and [Girlfriend] would continue to renovate and manage the properties and collect rent from tenants. Fourth, Husband transferred the properties to [Girlfriend] for little or no consideration. That is, he transferred all the properties to [Girlfriend] for ten dollars. Finally, the transfer of these properties from Husband to [Girlfriend] was effectively a transfer between family members. Although [Brother] and [Girlfriend] have never been married, they have been in a relationship for over thirty years and have three children together. All of this together constitutes a pattern of fraudulent intent.

Related posts.


Part of my practice is to advise parties in connection with post-judgment collection matters. 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.

The Indiana Lawyer: Bankruptcy Flood Coming?

This article in The Indiana Lawyer predicts a "flood" of COVID-related bankruptcy filings and quotes a number of local BK lawyers.  That flood, which many predicted in March and April would have occurred by now, has not happened - yet.  But, conventional wisdom suggests it's not a matter of if, but when.  I tend to agree.

The same goes for COVID-related foreclosure filings, both residential and commercial.  Of course the consumer foreclosure moratorium prevented and, in many cases, continues to prevent a tidal wave of residential cases.  The interesting thing is that, at least from what I've seen, commercial foreclosures in Indiana have not spiked at all. 

My understanding is that, if a commercial flood, is coming, it will start with hotels - unless Congress provides some kind of bail out.  Having said that, with the stimulus money, combined with the general attitude of forbearing instead of foreclosing, it's difficult to predict when, or even if, a commercial foreclosure tsunami is near.        

Credit Card's Summary Judgment Reversed Due To Flawed Affidavit

In Zelman v. Capital One, 133 N.E.3d 244 (Ind. Ct. App. 2019), the Indiana Court of Appeals reversed the trial court's summary judgment in favor of a credit card lender based upon the lender's failure to "lay a proper foundation to authenticate the Customer Agreement or credit card statements as business records admissible under Evidence Rule 803(6)'s hearsay exception." 

Respectfully, I don't entirely agree with the Court's analyis, but admittedly I don't handle credit card collection cases.  Nevertheless, the opinion is notable for parties and their counsel who seek summary judgments in debt collection cases.  The Court held:

To support its motion for summary judgment, Bank was required to show that Zelman had opened a credit card account with Bank and that Zelman owed Bank the amount alleged in the complaint.


... the Affidavit of Debt did not lay a proper foundation to authenticate the Customer Agreement or credit card statements as business records admissible under [Rule 806].

For the technical details and related law upon which the Court made its decision, please review the opinion.  Key problems surrounded the fact that the affiant was an employee of a third party that had acquired the debt and had not personally examined all of the business records related to the loan.  Again, bear in mind this was not a mortgage foreclosure action or a suit based upon a promissory note.

Zelman is similar to Holmes v. National Collegiate Student Loan Trust, 94 N.E.3d 722 (Ind. Ct. App. 2018) , which dealt with school loan debt and which I discussed on 1/13/19.

Here are some other posts related to Indiana affidavits and summary judgment procedure:

I represent parties in real estate and loan-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.


Is The Label “Indiana Lender Liability Act” A Misnomer?

In the past, I’ve heard things from secured lenders like:  “you don’t see any exposure to our bank under the Lender Liability Act, do you?” or “surely the borrower won’t countersue us under Indiana’s lender liability statute.”  People are sometimes surprised to learn that the so-called “Indiana Lender Liability Act” (“ILLA”), Ind. Code § 26-2-9, doesn’t list claims or causes of action that can be asserted against a lender.  The ILLA primarily deals with the issue of evidence, specifically the inadmissibility of oral testimony about the terms of a loan.  (Interestingly, the statute’s official title in the Indiana Code is “Credit Agreements.”)  The definitive ILLA case is Sees v. Bank One, 839 N.E.2d 154 (Ind. 2005) (Sees.pdf).  Somewhat amusingly, the Indiana Supreme Court itself struggled with the label: 

In the first reported opinion discussing the statute since its 2002 re-codification, the Court of Appeals refers to it as the “Indiana Lender Liability Act.”  . . .  Sees refers to the statute alternatively as the “Indiana Lender Liability Act” and the “Credit Agreement Statute.”  . . .  Bank One refers to the statute as the “Credit Agreement Statute of Frauds.”  . . .  We agree with the Court of Appeals’ designation and thus refer to the statute as the Indiana Lender Liability Act.

Lender liability, generally.  It is true that “lender liability” is a common phrase used to describe a borrower’s potential claims against a lender due to the conduct of the lender with regard to a particular loan relationship.  Capello & Komoroke, Lender Liability Litigation: Undue Control, 42 Am. Jur. Trials 419 § 1 (2005).  This body of law comprises a wide variety of both statutory and common law causes of action.  One of many examples is the Fair Debt Collection Practices Act.  There are, in fact, a multitude of federal and state laws that could form the basis of a lawsuit against a lender.  The ILLA is not one of those laws, however. 

The ILLA rule.  The essence of the ILLA can be found in section 4, which provides that “a [borrower] may assert a claim . . . arising from a [loan document] only if the [loan document] . . . [1] is in writing; [2] sets forth all material terms and conditions of the [loan document] . . . ; and [3] is signed by the [lender] and the [borrower].”  The ILLA effectively protects lenders from certain kinds of liability.  That’s why the label “Lender Liability Act” seemingly is inconsistent with the law’s true nature. 

Statute of frauds.  Sees provides an excellent discussion of the statute, its history and its policies.  In a broad sense, the legislative intent behind the statute is to protect lenders from lawsuits by borrowers (or guarantors) asserting fraudulent claims.  Hence the “in writing” requirement in the ILLA.  As such, the ILLA actually is a “statute of frauds,” which at its core is a procedural law about the exclusion of certain testimony of a witness at trial.  Black’s Law Dictionary defines “statute of frauds” as “. . . no suit or action shall be maintained on certain classes of contracts or engagements unless there shall be a note or memorandum thereof in writing signed by the party to be charged . . ..”  As noted by Judge Posner in Consolidated Services, Inc. v. KeyBank, 185 F.3d 817 (7th Cir. 1999):

 [T]he principle purpose of the statute of frauds is evidentiary.  It is to protect contracting or negotiating parties from the vagaries of the trial process.  A trier of fact may easily be fooled by plausible but false testimony to the existence of an oral contract.  This is not because judgment or jurors are particularly gullible, but because it is extremely difficult to determine whether a witness is testifying truthfully.  Much pious lore to the contrary notwithstanding, ‘demeanor’ is an unreliable guide to truthfulness.

Be a wise guy.  Next time someone asks you whether your commercial lending institution may have exposure to a lawsuit or a counterclaim based on Indiana’s Lender Liability Act, you can explain to them that the ILLA does not really articulate any theories of liability.  Rather, the ILLA limits breach of contract actions to the terms of the loan that are memorialized.  Again, this is not to say that there is no “lender liability” in Indiana.  The generic term “lender liability” is proper when referring to the many possible claims of wrongdoing that exist.  In short, lenders can be exposed to liability, but they shouldn’t be held liable in Indiana for any alleged violations of loan terms unless such terms (promises or duties) are in writing, signed by all parties. 


Part of my practice includes defending banks in lawsuits. 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 Sheriff's Sale Update

The COVID-related impact upon Indiana sheriff's sales has had a few layers:

    1.    The first involved Governor Holcomb's moratorium on residential foreclosure activity. Click here for more on that subject. That ended July 31, 2020, and some sheriff’s sales occurred in August. For example, after cancelling its monthly sales from March through July, the Marion County (Indianapolis) civil sheriff held a sale on August 21st. Click here for more information on Marion County sales.

    2.    The second layer surrounded the federal mandate. Despite the expiration of the state suspension, there still is a moratorium on sales of (and, in fact, foreclosure actions involving) FHA-insured mortgages. This freeze extends to year-end. Click here for a press release and here for my 4/6/20 post about the CARES Act.

    3.    The third is that neither the federal nor the state orders impacted commercial (business) foreclosures or sales. Nevertheless, it does not appear that any commercial foreclosure sales occurred this Spring or early Summer. I could be wrong, but as a practical matter, my understanding is that sheriff’s sales simply stopped, even for commercial real estate.

    4.    The fourth and more subtle layer of COVID's impact upon Indiana sheriff’s sales relates, not to economic relief, but to safety and social distancing. (This might explain why no commercial sales happened.) As I’ve written here previously: local rules, customs, and practices control county sheriff’s sales. Thus, there is a certain degree of latitude that each county has, or is taking, with respect to whether to proceed with sales during the pandemic. A quick survey of the websites of SRI and Lieberman, two private companies that hold sheriff’s sales for select counties, shows that several sheriff’s offices in Indiana still are not having sales, despite the termination of the state and federal moratoria. My understanding is that these continued delays are based upon public health reasons and/or a county sheriff's interpretation of local social distincing guidelines.  

The upshot is to contact the county sheriff’s office, either by phone or via the internet, to determine exactly what’s going on with your particular case as the COVID situation continues to unfold.


I represent parties in connection with foreclosure cases and sheriff’s sales. 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.

REAL ESTATE FINANCING TIDBITS: Consistency In Both the Form and Substance Of An Indiana Land Contract Is Essential To Post-Breach Enforcement

Standard Operating Procedure.  Traditional real estate financing involves a purchase evidenced by a deed, coupled with a promissory note secured by a mortgage.  The seller typically (but not always) is out of the picture because title transfers at closing.  The seller receives the full purchase price in exchange for delivering a deed to the buyer.  (The exception is when the seller takes back a note and mortgage and thus become the lender/mortgagee, but most transactions are financed by a third party.)  In a conventional sale, what remains post-closing is a lien on the real estate that serves as collateral for the loan.  If the new owner (borrower/mortgagor) defaults under the loan, the lender/mortgagee has the right to sue for the debt and foreclose its mortgage. 

Purchase Without A LoanA land contract is another, albeit less conventional, form of real estate financing.  The deal normally requires the buyer to make payments over time to the seller (the owner).  In many instances, the contract will require a down payment and/or a large balloon payment.  Only after the buyer fully pays the contract price does the buyer get a deed and become the owner.  In the interim, although the buyer gets to possess and occupy the real estate, legal title remains with the seller, although something called equitable title vests with the buyer.  See Skendzel v. Marshall, 261 Ind. 226, 234, 301 N.E.2d 641, 646 (1973) (“Legal title does not vest in the vendee [buyer] until the contract terms are satisfied, but equitable title vests in the vendee [buyer] at the time the contract is consummated.”)  One might say that the seller is a hybrid between a landlord and a bank.  Usually, but not always, these transactions apply to situations where the buyer is unable or unwilling to get a traditional loan, or to informal deals between family and friends.

Rights Upon Breach?  Indiana substantive law and the procedural rules related to mortgage foreclosures are fairly settled, which is to say that the parties’ rights and remedies are well established.  This is not the case with land contracts, which may seem simple to close yet can be complicated to enforce.  When there is a breach of the agreement, the dispute may look and feel like an eviction proceeding, a mortgage foreclosure action, or both.  Frankly, lawyers and judges struggle with how best to handle land contract disputes, and the parties themselves rarely understand what can or should happen if the deal goes bad.    

I attribute this potential complexity to the overlapping ownership and possessory rights of the parties.  Should the contract be treated like a lease (possession only) or like a mortgage (lien/ownership)?  Upon a default, should the seller/owner be permitted to simply evict the buyer, or should the seller be forced to obtain a foreclosure decree and have a sheriff’s sale?

Sale Or Lease?  When faced with a purported land contract enforcement action, one should examine whether the contract fits the mold of a sale versus a lease.  The answer to this question will control the remedies upon the default.  (By the way, these issues are not unique to real estate law.)  In a standard land contract dispute, the owner/seller will want the buyer out of the property asap with as little legal and practical hassle as possible.  In other words, the owner will want to evict the buyer, a remedy known as forfeiture in this context.  On the other hand, the buyer may want to protect its alleged equity in the real estate or, in other words, will want credit toward ownership for the payments made.  This is to say that the buyer may want the rights attendant to mortgage foreclosure actions (time, right of redemption, sheriff’s sale process, etc.).  

The Rainbow Realty Case

    The Issue.  This brings me to today’s topic, last year’s Indiana Supreme Court opinion in Rainbow Realty Group v. Carter, 131 N.E.3d 168 (Ind. 2019).  The decision is interesting and impactful on many levels for non-traditional lenders, real estate developers, and landlords.  For purposes of my blog and particularly today’s post, however, I’ll zero in on the Court’s discussion of whether the written agreement was a land contact or a lease.  Were the parties to the dispute sellers/buyers or landlords/tenants?  Unlike most land contract disputes, the buyers in Rainbow wanted the agreement to be a lease so they could countersue for damages.

    The Facts.  The contract in Rainbow was labeled a “Purchase Agreement (Rent to Buy Agreement).”  The language in the agreement clearly expressed an intent to be a thirty-year land contract as opposed to a lease, although the first two years of payments were in fact for “rent.”  If the buyer performed for the first two years, the parties would execute a separate “Conditional Sales Contract (Land Sale)” for the remaining 28 years.  The seller contended the agreement was a land contract, and the buyer asserted the agreement was a lease.  The heart of the dispute was whether the seller could be liable to the buyer for damages for failing to comply with Indiana’s residential landlord-tenant statutes, Ind. Code 32-31.  The seller contended it was exempt from those laws.

    The Holding.  The Court concluded that the agreement was not a land contract, even though wording in the document said things like “My intent is to purchase … [and] I am not renting the property….”  Indeed the Court conceded “that most of the transaction’s terms and formal structure suggest this was a sale … necessitated by the Couple’s inability to afford a down payment for the House.”  Sometimes, the label or title to a contract, or written stipulations in the contract, are immaterial.  Rarely does form prevail over substance.  The Court in Rainbow said:  “the transaction’s purported form and assigned label do not control its legal status.” 

    The Rationale.  The key appeared to be that the agreement operated as a lease for two years with a contingent commitment to sell, which sale would require a separate contract.  Importantly, “if the Couple defaulted before executing the subsequent ‘Land Contract’, or they failed to make payments or to close this latter transaction, they were subject to eviction and forfeiture of all payments made.”   The opinion reads:

During the Agreement's twenty-four-month term, [the seller] reserved for themselves a landlord's prerogative to enter the premises, restricted the Couple's use of the land, and, upon the Couple's default, evicted them as if they were tenants and kept their “rental payments”.  These features, taken together, are particular to a residential lease. Thus, the parties' Agreement—a purported rent-to-buy contract—is not a “contract of sale of a rental unit” and thus is not exempt from the Statutes' coverage under Section 32-31-2.9-4(2).

The Policy.  The seller’s structure in Rainbow backfired.  There is a lot more to story, so please read the opinion if you are interested in more detail.  There are consumer rights themes built into the Court’s findings.  In a nutshell, following a payment default by the buyer, the seller sued for damages and repossession, not unlike a land contract dispute.  To the chagrin of the seller, which appeared to be offering financing and housing to low income individuals, the seller ended up facing a judgment for money damages and attorney fees as a de facto landlord.  The Court held that the structure of the deal in Rainbow, namely an initial two-year rental term followed by a subsequent sale term, was not a land contract, at least for the first two years, making the seller a landlord.  Here is the Court’s policy statement:

If this case were simply about the parties' freedom of contract, the [buyers] would have no legal recourse. Plaintiffs disclaimed the warranty of habitability, informed the [buyers] that the House required significant renovation, and forbade them from taking up residence there before it was habitable. The [buyers] agreed to these terms but soon thereafter violated them. Were it not for the governing Statutes, Plaintiffs would be entitled to relief against the Couple for having breached their Agreement. But the Statutes are not about vindicating parties' freely bargained agreements. They are, rather, about protecting people from their own choices when the subject is residential property and their contract bears enough markers of a residential lease. Unless a statute is unconstitutional, the legislature is entitled to enact its policy choices. The disputed statutes at issue here reflect those choices.

Some Takeaways

    Can’t have it both ways.  The format of a “rent-to-buy” aka a land contract is often ambiguous and places the owner in a hybrid role as both a landlord and seller.  Seemingly, in Rainbow the development company drafted an agreement that was a combination of a lease and a land contract.  It wanted the document classified as a land contract so it did not have the responsibilities of a landlord.  At the same time, the developer wanted the benefit of a lease for the first couple of years so it could easily evict the buyer if he or she did not pay.  Parties entering into these types of agreements should be wary of how their contract will be characterized.  Both the format and substance of the agreement should be consistent to avoid any confusion regarding the parties’ rights and obligations.  Not often will the law allow one to have its cake and to eat it, too.

    Be clear.  If as a seller you want to be able to retain ownership and simply evict an occupant after he/she fails to make payment, then you should expect the court to treat the agreement as a landlord-tenant arrangement.  If on the other hand you want to sell the property through payments over time, the form and substance of the agreement should make it clear that the deal is to convey ownership, and you should recognize that equitable title and its associated rights vest with the buyer.

    My two cents.  Finally, in case you’re wondering, I personally would never recommend entering into a land contract, as either a seller or a buyer.  There are too many risks and uncertainties.  With leases or loans, everyone – including the courts – knows where the parties stand.  If traditional financing isn’t an option, seller financing in the form of a standard note and mortgage is, in my view, better than a land contract.

(Thanks to my colleague David Patton for his help with this article.)

I represent parties in real estate and loan-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.

Email Evidence Of Alleged Loan Modification And Promissory Estoppel Defeats Auto Dealer Lender’s Summary Judgment Motion

Lesson. Lenders, particularly those that are not conventional banks, should proceed carefully when entering into and executing upon loan modification or workout discussions. An innocent or well-intended email or phone call could come back to haunt you.

Case cite. SWL v. Nextgear, 131 N.E.3d 746 (Ind. Ct. App. 2019)

Legal issues. Whether a “floor plan” finance company was entitled to summary judgment on the borrower’s defenses, which were (1) that the lender modified its loan or (2) was otherwise barred from enforcing the default based upon promissory estoppel.

Vital facts. Plaintiff lender and defendant borrower, a car dealer, entered into a promissory note and security agreement in which the lender agreed to extend a revolving line of credit to the borrower. The borrower used the money to buy vehicles at auctions. As part of the financing arrangement, the parties agreed to a payment schedule detailing, among other things, the money the borrower was required to repay for each vehicle it purchased with the lender’s funds.

At some point, the borrower became delinquent on its payments, and the parties began discussing how to proceed. On the one hand, there was evidence that the borrower’s plan was to liquidate its inventory and pay off the loan. On the other hand, there was evidence, primarily in the form of an email exchange, in which a representative of the lender pushed for and stipulated to a plan to salvage the relationship. The borrower claimed that, in reliance on the email exchange, it made a couple more payments in an apparent effort to pay down the loan and continue the lending relationship. Something broke down, however, causing the lender to repossess the borrower’s remaining vehicles and file suit to collect the balance owed on the loan.

Procedural history. The lender filed a breach of contract action. The borrower asserted the defenses of modification and promissory estoppel. The trial court granted the lender’s motion for summary judgment, and the borrower appealed.

Key rules.

    Oral modification. Despite language in a contract expressing that it can only be modified by written consent, a contract “may nevertheless be modified orally.” Moreover, modification “can be implied from the conduct of the parties.” Intent is what matters – the parties’ “outward manifestations of it” or, in other words, “the final expression of that intent found in conduct” as opposed to one’s subjective intent.

    Promissory estoppel. The doctrine provides that, where parties believed they had a contract but in fact did not, equity applies to hold the parties to their representations to each other. To demonstrate that the doctrine of promissory estoppel applied in SWL, the borrower was required to show:

(1) a promise by the promissor; (2) made with the expectation that the promisee will rely thereon; (3) which induces reasonable reliance by the promisee; (4) of a definite and substantial nature; and (5) injustice can be avoided only by enforcement of the promise.

In SWL, the “promissor” was the lender, and the “promisee” was the borrower.

As an aside, please note that Indiana's Lender Liability Act did not apply to this case because the plaintiff lender in SWL was not a conventional bank.  For more, click on the Related Posts below.

Holding. The Indiana Court of Appeals reversed the summary judgment in favor of the lender and remanded the case for trial.

Policy/rationale. First, it’s important to remember that SWL was a summary judgment case, not a trial. Issues of fact, mainly surrounding the modification discussions and the parties’ intent, prevented a pretrial judgment for the lender. If the case were tried, the lender still could prevail.

With regard to the modification issue, the borrower designated evidence to raise a genuine issue of material fact concerning whether the lender intended to modify the terms of the promissory note when the lender’s rep spoke with the borrower’s rep and sent the email. “Because the parties' conduct is subject to more than one reasonable inference, we cannot say as a matter of law that the parties did not modify the Contract.”

As to the promissory estoppel matter, the lender keyed in on the legal requirement that the alleged promise must be of a “definite and substantial nature.” The borrower had in fact been in default on vehicles other than those addressed in the fateful email at the heart of the case. However, the borrower’s affidavit in opposition to the summary judgment motion raised questions surrounding the matter of default. The Court reasoned:

[The borrower’s] affidavit is sufficient evidence to create a genuine issue of material fact concerning whether [the borrower] was in default when [the lender sent] the February email. And even if [the borrower] were in default as of February 24, 2016, the designated evidence suggests that, because [the borrower] had a “lengthy impeccable history,” [the lender] proposed a course of action to cure any default and for [the borrower] to maintain its good standing. We therefore cannot say as a matter of law that [the lender] did not make a definite and substantial promise to [the borrower].

Related posts.

I represent parties in disputes arising out of loans. 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.

Tax Deed Denied Because Redemption Notice Suggested The Amount To Redeem Included Surplus Funds

Lesson. A tax sale purchaser may not obtain a tax deed if the statutory redemption notice inflates the redemption amount. Such notices should not include any overbid/surplus funds as being required for redemption.

Case cite. Pinch-N-Post, LLC v. McIntosh, 132 N.E.3d 14 (Ind. Ct. App. 2019)

Legal issue. Whether tax sale purchaser’s post-sale statutory redemption notice substantially complied with Indiana law despite erroneously including purchaser’s overbid amount.

Vital facts. Tax sale purchaser (“Purchaser”) timely sent the post-sale statutory redemption notice to the owner/tax payer (“Owner”). This is sometimes referred to as the “4.5 Notice” based upon the relevant statute. Owner did not redeem the property from the tax sale.  The contents of the 4.5 Notice were at issue in McIntosh. Purchaser bought the tax sale certificate for $8752.00, which included an overbid (surplus) amount of $4679.29. The 4.5 Notice erroneously listed the overbid as a component of the redemption amount.

Procedural history. Purchaser filed a petition for tax deed, and Owner objected. After a hearing, the trial court denied the petition, and Purchaser appealed.

Key rules. The Indiana Court of Appeals summarized the tax sale process:

the sale proceeds first satisfy the property tax obligation for the property, then satisfy certain other qualifying tax obligations of the property owner, with any surplus going into the Surplus Fund. In other words, the Surplus Fund is comprised of the overbid. The Surplus Fund may also be used to satisfy taxes or assessments that become due during the redemption period. Finally, if the property is redeemed, the tax-sale purchaser has a claim on whatever is in the Surplus Fund, and, if a tax deed is issued, the original owner does.

A 4.5 Notice arises out of Indiana Code 6-1.1-25-4.5. The notice must include, among other things, “the components of the amount required to redeem” the property from the sale. Indiana Code 6-1.1-24-6.1(b) details those components. The overbid/surplus is not one of the components.

Holding. The Court affirmed the denial of the petition for tax deed but remanded the case with instructions for the trial court to order a new 120-day redemption period with a new 4.5 Notice.

Policy/rationale. The trial court found that the 4.5 Notice “greatly overstated” the redemption amount. The Court of Appeals agreed that the notice “would have led a reasonable person to conclude that the total redemption amount was far greater than it actually was….” The Purchaser made a number of arguments in support of its theory that the 4.5 Notice substantially complied with the applicable statutes and was not inaccurate. However, the Court rejected the Purchaser’s position and reasoned that the notice “asked [Owner] to jump through too many hoops to discover the true redemption amount, a situation that only existed because [Purchaser] - misleadingly and without justification – included the overbid in the first place.”

Related posts.

I sometimes am engaged by mortgage loan servicers or title companies to represent lenders/mortgagees in real estate-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.

Court Invalidates Mortgages In Favor Of Creditor In Judgment Lien Foreclosure Action

Lesson. If you are trying to collect a judgment and suspect the judgment debtor granted a bogus mortgage to neutralize the judgment lien, then study the description of the purported debt in the mortgage and investigate the debt’s nature. You may be able to invalidate the mortgage lien.

Case cite. Drake Investments v. Ballatan, 138 N.E.3d 964 (Ind. Ct. App. 2019) (unpublished, memorandum decision)

Legal issue. Whether the subject mortgages were invalid, rendering priority in title to the judgment lien.

Vital facts. Judgment creditor Ballatan obtained a 125k judgment against Huntley on 9/28/07. While the underlying action was pending but before the entry of judgment, Huntley granted mortgages to her son on four parcels of real estate. The one-page mortgages indicate that Huntley agreed to pay her son an aggregate amount of 830k secured by the real estate. The son testified that Huntley granted the mortgages “in exchange for [son] taking care of [mom’s] living expenses….” Three years later, the son paid Huntley 30k for title to all the real estate. Then, the son transferred ownership of the four parcels to Drake Investments. The son was the president of Drake.

Procedural history. Ballatan filed suit to foreclose his judgment lien against the real estate formerly owned by Huntley, the judgment debtor. Drake asserted that the mortgages had priority over the judgment lien. The trial court granted summary judgment in favor of Ballatan and against Drake, which appealed.

Key rules.

Indiana Code 32-29-1-5 defines the proper form for mortgages in Indiana.

Indiana common law provides that mortgages must secure a debt that must be described in the document:

The debt need not be described with literal accuracy but it ‘must be correct so far as it goes, and full enough to direct attention to the sources of correct information in regard to it, and be such as not to mislead or deceive, as to the nature or amount of it, by the language used.’ It is necessary for the parties to the mortgage to correctly describe the debt ‘so as to preclude the parties from substituting debts other than those described for the mere purpose of defrauding creditors.’ As our federal sister court has observed, ‘most Indiana cases have examined the description of the debt as a whole to decide whether it puts a potential purchaser on in essence inquiry notice of an encumbrance, and whether it is specific enough to prevent the substitution of another debt.’

Holding. The Indiana Court of Appeals affirmed the trial court and held that the mortgages were invalid.

Policy/rationale. The Court’s opinion has a lengthy and thorough discussion of what constitutes a valid mortgage in Indiana, in particular the requirement for the description of the underlying debt. In Drake, the mortgages referred to promissory notes for the purported debts, but Drake never produced the notes. In fact, the only evidence was that the mortgages secured payment of future living expenses for Huntley. In other words, Huntley did not owe her son money upon execution of the mortgages. The mortgages also failed to include a date for repayment as required by statute. “One cannot tell from looking at the [mortgages] when [son’s] purported mortgage interest … was scheduled to expire.” Thus, the descriptions of the debts were inaccurate. Further, the Court concluded that the inaccuracies were “sufficiently material” to mislead or deceive as to the nature and amount of the debt. The mortgages made no connection between, or mention of, the debt and the living expenses. “The descriptions of the debts are so vague that they do not preclude [Huntley] and [son] from substituting other debts for the debts described.”

Related posts.

I represent judgment creditors and lenders, as well as their mortgage loan servicers and title insurers, entangled in lien priority 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.

Indiana's Recording Law Change, Effective July 1

I'm passing along information distributed by the Indiana State Bar Association.  For today's content, all the credit goes to the ISBA:   

On July 1, 2020, an obscure change to an Indiana recording statute becomes effective, requiring lawyers to change how they prepare deeds, mortgages, powers of attorney, affidavits, and other instruments that must be recorded in an Indiana County recorder’s office.

The ISBA has drafted a directive to provide significant guidance to all members about this change and the sufficiency of signatures and notarial certificates for recording any deed, mortgage, or other paper or electronic instrument after June 30, 2020.

Click here for the ISBA's directive.  

Governor Holcomb's June 30 Order Extending Residential Foreclosure Moritoriaum

Section 1 of the Governor's order addresses residential mortgage foreclosures and follows-up his order order from March 19th, which was the subject of my March 28th post.  Here are the highlights:

  1. Residential mortgage foreclosure actions based upon nonpayment cannot be filed until August 1.
  2. This does not change the federal order that prevents FHA-insured mortgages from being foreclosed through August 31.
  3. Foreclosure actions on vacant or abandoned property can proceed.

Lender’s Failure To Comply With HUD’s Face-To-Face Meeting Requirement Dooms Indiana Mortgage Foreclosure Action

Lesson. A borrower/mortgagor may be able to defeat a foreclosure action if a lender/mortgagee does not comply with HUD regulations designed to be conditions precedent to foreclosure. For example, in certain cases, a failure to have an in-person meeting with the borrower/mortgagor before the borrower becomes more than three full months delinquent in payments, could lead to the dismissal of a subsequent foreclosure case.

Case cite. Gaeta v. Huntington, 129 N.E.3d 825 (Ind. Ct. App. 2019). NOTE: Gaeta is a so-called “memorandum decision,” meaning that, under Indiana law, the opinion is not supposed to be regarded as precedent or cited before any court. Nevertheless, the analysis and outcome are noteworthy.

Legal issue. Whether, in the context of a HUD-insured loan, a lender violated 24 C.F.R. 203.604 by failing to have a face-to-face meeting with the borrower before three monthly installments due on the loan went unpaid and, if so, whether the violation constituted a defense to the lender’s subsequent foreclosure suit.

Vital facts. The nine pages summarizing the underlying facts and the litigation in the Gaeta opinion tell a long and complex story. From the view of the Indiana Court of Appeals, the keys were: (1) the borrower defaulted under the loan by missing payments, (2) the lender failed to have a face-to-face interview with the borrower before three monthly installments due on the loan went unpaid, and (3) the lender filed a mortgage foreclosure action without ever having the face-to-face meeting.

Procedural history. This residential mortgage foreclosure case proceeded to a bench trial, and the court entered a money judgment for the lender and a decree foreclosing the mortgage. The borrower appealed.

Key rules.

24 C.F.R. 203.604(b) requires certain lenders to engage in specific steps before they can foreclose. One of those steps is to seek a face-to-face meeting with the mortgagor (borrower) “before three full monthly installments due on the mortgage are unpaid….” Click here for the entire reg.

There are exceptions to the face-to-face requirement, one of them being if the parties enter into a repayment plan making the meeting unnecessary. See, Section 604(c)(4).

The Court cited to and relied upon its 2010 opinion in Lacy-McKinney v. Taylor, Bean & Whitaker Mortgage, 937 N.E.2d 853 (Ind. Ct. App. 2010). Please click on the “related post” below for my discussion of that case.

“Noncompliance with HUD regulations [can constitute] the failure of the mortgagee to satisfy a HUD-imposed condition precedent to foreclosure.”

Not all mortgages are subject to HUD regs – only loans insured by the federal government.

Holding. The Court of Appeals reversed the trial court’s in rem judgment that foreclosed the mortgage. However, the Court affirmed the money judgment.

Policy/rationale. The Court concluded that the lender’s failure to conduct, or even attempt to conduct, a face-to-face meeting with the borrower before he became more than three months delinquent was a “clear violation” of applicable HUD regs. The lender made several arguments – very compelling ones in my view – as to why it substantially complied with the reg or did not violate the reg to begin with. The trial court agreed. The Court of Appeals disagreed, choosing to apply a strict reading of the law.

See the opinion for more because no two cases are the same, and the outcome could be different in your dispute. The silver lining, if there was one, for the lender was that the in personam judgment on the promissory note stood and thus created a judgment lien on the subject property. The debt was not extinguished - only the mortgage.

Related post. In Indiana, Failure To Comply With HUD Servicing Regulations Can Be A Defense To A Foreclosure Action 
Part of my practice includes representing lenders, as well as their mortgage loan servicers, entangled in contested residential foreclosures and servicing 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.