Three recent decisions from the Seventh Circuit Court of Appeals and the Northern District of Illinois represent wins for mortgage servicers defending borrower claims. In each case, the servicer was represented by Bryan Cave cross-office teams.

Northern District of Illinois Dismisses Class Action Suit Alleging Violation of the Truth In Lending Act:
A multi-office team recently prevailed in the Northern District Court of Illinois when the court granted our motion to dismiss the amended complaint in a class action involving the Truth In Lending Act (TILA). Bryan Cave represented the defendant mortgage servicer in Kier v. Ocwen Loan Servicing, LLC, et al. Plaintiff brought the case as a putative class action and contended that TILA and Regulation Z prohibited Ocwen from charging borrowers a $10 convenience fee for making a rush online mortgage payment. Plaintiff attempted to equate this voluntary convenience fee with a penalty that TILA prohibits servicers from charging when the servicer fails to credit a borrower’s payment on the date it was received. After a meticulous analysis of TILA, the opinion – the first to address such an issue – rejected Plaintiff’s argument, holding that TILA does not prohibit a mortgage servicer from charging a convenience fee for use of an online payment platform.

Seventh Circuit Clarifies When an Appeal of a Foreclosure Judgment May be Taken in Federal Court:
The Seventh Circuit recently clarified that the Illinois Mortgage Foreclosure Law imposes too many steps after entry of a judgment of foreclosure for the order to be “final” for purposes of appellate jurisdiction. In HSBC v. Townsend, 793 F.3d 771 (7th Cir. 2015) the court sought briefing on a unique jurisdictional issue of whether the Seventh Circuit had appellate jurisdiction to review interim foreclosure and sale orders under a line of federal cases dating back to 1839. The court adopted the view advanced by Bryan Cave that permitting piecemeal review of a foreclosure will only serve to delay foreclosure proceedings. The practical effect of the court’s decision is that in federal court Illinois mortgagors will only be able to appeal their foreclosure case one time after the sale confirmation order is entered.

Judge Posner authors opinion in frivolous pro se borrower case:
Bryan Cave recently won a victory for Homeward Residential, Inc. in the Seventh Circuit Court of Appeals affirming dismissal of the pro se borrower complaint. Plaintiff filed suit to quiet title in the property that was foreclosed on by the co-defendant. Plaintiff also asserted violations of his constitutional rights and alleged that the foreclosing party did not have standing to foreclose. In Carter v. Homeward Residential, Inc., 794 F.3d 806 (7th Cir. 2015) the Seventh Circuit affirmed the dismissal of the complaint on grounds that the suit was frivolous and that Plaintiff failed to state any constitutional claims. The district court agreed that it lacked subject matter jurisdiction over the case based on Rooker Feldman given that the lawsuit was a collateral attack on the state court judgment. In dicta, Judge Posner lambasts the needless overuse of phrases such as “utterly frivolous,” providing a summary of how courts use “redundant verbiage” such as “obviously frivolous,” “essentially fictitious,” and “no longer open to discussion.” He noted that the “bare word ‘frivolous’ should be enough to denote a complaint that on its face does not invoke federal jurisdiction.” Judge Posner went so far as to invite the U.S. Supreme Court to reexamine a 41-year-old decision where the Supreme Court seemed to endorse the “redundant verbiage.”