Jmr Real Estate Awesome

8/3/2019 Jmr Real Estate Awesome

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COMMON TERMS

Mortgagorperson who borrows $$ to buy apiece of property

Mortgageelender/creditor

Vendorperson or agency that sells Vendeebuyer

I. Warranties of QualityA. Stambovsky v. Ackley

o Rule: A condition that impairs the value of property, known to the seller and leftundisclosed to the buyer can constitute a basis for rescission of the contract. Where a condition which has been created by the seller materially impairs the value

of the contract and is peculiarly within the knowledge of the seller or unlikely to bediscovered by a prudent purchaser exercising due care with respect to the subjecttransaction, nondisclosure constitutes a basis for rescission as a matter of equity

a) Noteso Growing trend to treat silence as fraudulent concealment if the matter

not disclosed is material Additional factors that tend to increase the probability of seller

liability include

Property is a personal residence Defect is dangerous to health or safety Seller personally created the defect Seller gave reassurances to the buyer Purchaser did not rely on a professional inspection

o New houses by builders = Implied warrantyo Old houses = outright fraud claims, fraudulement concealment theory,

any express warranties or contract covenantso

Psychologically impactedmany states have adopted statutes thatpreclude liability of sellers for failure to disclose a home that ispsychologically impacted

B. Speight v. Walters Development Co.,o Factssuit for breach of implied warranty of workmanlike construction against the

builder. After purchase, buyers noticed water damage and mold Implied Warranty of Workmanlike Constructionrequires that a building be

constructed in a reasonably good and workmanlike manner and be reasonably fit forthe intended purpose

o Issuecan they sue under implied warranty for a subsequent purchaser?o Rule: Doctrine of Implied warrantly of workmanlike construction applies to subsequent,

as well as initial purchasers Notes

o Statutes of ReposeStatutes of limitation specifically for constructioncases. Incorporate the discovery rule into their time periods and donot begin to run until the injury was or should have been discovered.

o Express disclaimer can negate the implied warranty, but it must beclear and unambiguous


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o NOR statutes (notice and repair)30 states have adopted whichrequire property owners to put builders on noite of construction defectclaims and give them an opportunity to fix before suit is filed

C. Title Covenants in Deedso Title Assurance - set of mechanisms which buyers of land use to (1) learn whether sellers

can convey title and (2) obtain recovery if the title turns out not to be as represented.o Deed Covenantsimply a statement in the deed which gives the grantee rights against

the grantor if the title is not promised

Crudest and least effective Few rely on it exclusively

Deed may contain no covenants of title at all called a Quitclaim DeedTypes of Title Covenants in Deeds

Covenant of Seisinthis is a promise by the grantor that he or she owns the land, although notnecessarily free of encumbrancesRight to Conveyusually overlaps covenant of seisin, a grantor who is AIF for the owener ofthe land under a valid DPA would have the right to convey, but would not have seisin

Against EncumbrancesThis is a promise that title is passing free of mortgages, liens,easements, future interests in others, covenants running with the land, etc.Warranty and Quiet EnjoymentThey amount to a promise by the grantor to compensate thegrantee for the loss if the title turns out to be defective or subject to an encumbrance- Covenant of warranty or quiet enjoyment is prospective in nature and is breached only when

there is an actual or constructive evictionFurther Assurancesthis is a promise by the grantor to execute such further documents as maybe necessary to perfect the grantees titleSpecial Warranty Deed

- The most obvious point of similarity between deed covenants and the contract covenant isthat both are concerned with title

- Deed covenants of title are not breached by legal violations that dont themselves affecttitle. Thus, existing conditions which breach local zoning or other ordinances are not

usually considered to violate deed covenants of title

- Important Differences between Contract Covenants and Deed Covenants for Titleo Remedies Available

Discover that title is unmarketable Contract: rescind, may also get specific performance Deed Covenant: damages

Standard of Quality Contract: good + marketable (not subject to unreasonable risk of litigation) Deed Covenants: no such test, good title will suffice

- Differences between Present and Future Covenantso Distinction is important because of SOL

Present covenantsSOL starts to run when deed is deliveredo Future covenants run with the land, present do not

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D. Brown v. Lobero Fact: Limited warranty deed, missing further assurances, only present covenantso Issue: What constitutes constructive eviction?o Rule: Covenant of warranty or quiet enjoyment is prospective in nature and is breached

only when there is an actual or constructive eviction

Notes Examples of Constructive Eviction

o Paramount title holder gets decree of specific performance/ejectmento Orders grantee off land or threatens litigationo Grantee buys the paramount title in order to avoid being evicted by its

holdero Grantee surrenders claim and moves off the lando Sued by person with paramount title and enters a settlement

Physical interference is an actual evictiono If the government is the holder of paramount title then that fact alone

will comprise an eviction

Recovery Limitso Cannot exceed the consideration received + interest, applies equally to

all covenantso Limited to actual loss

E. Title Assurance Methods- Proof of Title

o Most Government offices act as passive depositories for the instrumentso Recording is done at the county level

Hawaii and Alaska record at the state level- Title Insurance has arisen to absorb and spread most the risks that the public records system

presentso

Recording Acts: Deed is effective even without being recording, but law incentivizes recording.

F. Title Insurance- Title insurance is the predominant method of assuring real estate in the United States today

o It is the insurers promise that, if title is not in the condition described in the policy theinsurer will indemnify the insured the resulting losses Obtain title searches and exams before issuing policies Title companies spend a great deal of time any money in loss avoidance

Most losses includeo Mechanics Lienso Plant search errorso

Examination and opinion errorso Forgerieso Property taxes

G. Settlemento Closing also known as Settlement

1. Review the prelim title report Obtain executed copies of the deed Obtain funds from buyer and the new lender


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Arranging forcompletion of inspections

Record docs Disburse

funds

Lawyers have a declining role in

residential real estatetransactions

o But see, at least two courts

have held that closing services, such as preparing documents andexplaining them to buyers and sellers is unauthorized practice of law

o Dual Representation of Buyer/Seller Sometimes individuals cannot consent to a conflict of interest

o RESPA (REAL ESTATE SETTLEMENT PROCEDURES ACT)

Giving consumers more information about settlement costs and services Prohibits referral fees and fee-splitting among providers of settlement services Such fees were widespread before RESPA controlled entities are allowed within certain circumstances, mostly, if

consumers have notice.o Expansion - RESPA includes mortgages, and subordinate lien

transactions and refinancingo Fee-Splitting- prohibits receipt of a division of fees or charges made

for a settlement service, other than for services actually performed Mark-ups by lenders has been controversial

o Yield Spread PremiumsRESPEA is not implicated when lendermakes profit from loan origination fees

Might be implicated when Broker refers to lender and getsprofitsome courts see that as possible fee splitting,undecided.

o Cant require use of a specific title insurero Alternative to RESPA

It hasnt been as effective as intended in bringing down serviceprices and competitive levelsnew proposal never approvedGMPA

H. The Installment Land Contracto Most common substitute for the mortgage or deed of trust as a land financing device

Aka Contract for Deed, Long Term Land Contract Vendee goes into possession and agrees to make monthly installment payments ofprincipal and interest until the principal balance is paid off.

Vendor keeps legal title until final payment executes deed to the lando Different from an executory contract because it governs the parties

throughout the life of the debt, whereas the other doesnt govern afterclosing date

Forinstallments

which are dueplus interest

specificperformance

of the contract

damages for

the breach

to foreclosehis vendee's

rights

to quiet title or

rescind


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Forefeiture Clausecontained in almost all installment landcontracts

Provides that Time is of the essence and that whenthere is a default they can

o Terminate the contracto

Retake possession

o Retain all the payments as liquidateddamages

1. Russell v. Richardso To determine whether a forfeiture shocks the conscience of the court, this Court

applied the following equitable considerations; Amount of $$ paid by the buyer to the seller The period possession of the real property by the buyer The market value of the real property at the time of default compared to original

sales price

Rental potentialo Upon default and forfeiture, the buyer's interest is terminated and there is no

enhancement value to be recovered by the buyero Only unusual equitable circumstances create an exception to the rule that a general

consequence of default is forfeiture of all interestNotes

Strict Enforcement Approach When a purchaser enters into a contract for a deed w/ a seller, they

run the risk of default and losing the property Relaxing Strict Enforcement

Many state courts have in recent years refused to enforce a againsta defaulting vendee forfeiture clauses that the courts have deemedunreasonable or inequitable.

2. Petersen v. Hartell- Facts: entered agreements with three grandchildren to sell portions of land, with no down

payment and monthly installments of $50 or less. Buyers given the right to pay the entirebalance of the purchase of the price at any time. No provision making time of the essence orspecifying remedies in the event of default o Kids missed paymentso Granny decided to terminate contract

- Issue: Do plaintiffs have a right to conveyance of the property in exchange for full paymentof the purchase price in light of their substantial partperformance and the sellers notice ofelection to terminate the contract on account of such defaults?

- Rule: Vendee who has made substantial payments on a land installment contract has anunconditional right to a reasonable opportunity to complete the purchase by paying the entireremaining balance plus damages before the seller is allowed to quiet title.o Notes

Judicial recognition of a right of redemption- some states allow the tardy vendee afinal opportunity to pay the balance before losing the land


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Sometimes this right is unconditional, while other courts enforce it only ifsubstantial payments have been madeo Many courts impose a good faith requirement

Restitution as an alternative form of relief for the vendee Actual Damages:Market Value, Rental Value, Costs of Repossession,

Refinancing and Resalethe costs of repossession are actual damages,Miscellaneous Damages

3. Sebastian v. Floyd- Facts: P bought house and paid $3800 down, was to pay $10,9000 plus 8.5% interest in $120

monthly installments. Missed 7 installments.- Issue: Can clause in an installment land contract providing for forfeiture of the buyers

payments upon the buyers default may be enforced by the seller.- Rule: Sellers remedy for breach of the contract is to obtain a judicial sale of the

propertyo Equitable title passes to the buyer when the contract is entered

No practical distinction between the land sale contract and a purchase moneymortgage, both is the sellers financing using the property as collateral for the loan.

o When the purchaser of property has given a mortgage and subsequently defaults on hispayments, his entire interest in the property is not forefeited

o The modern trent treats land sale contracts as analgogous to conventional mortgages, thusrequiring a seller to seek a judicial sale of property upon the buyers default. Notes

Treating the installment land contract as a mortgageo Judicial treatment in this manner is for remedy purposeso Some states recognize forefeiture can still occur in two circumstances

Abandonment Only minimal payments have been made and the security has

been jeopardized.o Restatement says installment land contract creates a mortgage

so they will be governed procedurally and substantively by the

law of mortgages.

Waiver or estoppels as a defense against forfeitureo Prior acceptance of late payments will constitute waiver of the

forfeiture clause Similar to Equity of remedemption

II. Rights and Duties of the Parties Prior to ForeclosureA. Theories of Title: Possession, Rents, and Related Considerations


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o Notes Classifications of states - 32+ Follow Lien Theory! Mortagee in possession in lien states

Mortgagee may sometimes acquire possession of the mortgaged propertylegally by means other than foreclosureo 1) consento 2) a mortgagee who enters into peaceable possession in good faith

after purchasing at an invalid foreclosure may remain in possessionuntil a valid foreclosure

o 3) if mortgagor abandons real estate, mortgagees security interest isusually deemed sufficient to permit the mortgagee to take and retainpossession until foreclosure

Policy considerationwe dont want vandalism anddeterioration and prefer productive use

Liability of a mortgagee in possession Mortgagee-in-possession status makes the mortgagee liable in tort for

injuries resulting either through is actionable fault in utilizing the property orby reason of its failures to perform duties imposed by law upon the owner ofthe land.

Under a duty to maintain and preserve the propertyo There is a limit on the dutylow standard

Avoiding Mortgagee in possession status Because of the responsibilities, mortgagees use other methods, such as

receiverships to gain access to the rents and profits and control over themortgaged real estate pending foreclosure.

TitleT

heory

Legal Title to the mortgagedreal estate remains in themortgagee until themortgage is satisfied orforeclosed

For practical and theoretical

purposes the mortgagor =owner of the land

1. Statutes in some states give themotgagor the right to possessionuntil default

2. Commonly used mortgageforms containing similarprovisions achieve the same result

if not stated, Mortgagee hasa right to immediatepossession against themortgagor

LienT

heory

the mortgagee is regardedas owning a securityinterest only and both legaland equitable title remain inthe mortgagor untilforeclosure or deed

Substantial amount of jxns follow thistheory

Some States providethat themortgagee is entitled to maintain apossessory action for themortgaged real estate

Some also state "mortgagor shallbe deemed to be the owner of theland"

Lien theory means that amortgagor, prior toforeclosure, may prevailagainst the mortgagee forany interference withthemortgagor's possession ofthe mortgaged real estate tothe same extent that any

owner of land wouldprevail against a trespasser

IntermediateT

heory

Legal and equitable titleremain in the mortgagoruntil a default, at whichtime legal title passes to themortgagee

Only a few states follow

Mortgagee has the right topossession and to collect rents andprofits after mortgagor default


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1. Dover Mobile Estates v. Fiber Form Products, Inc.- Facts: five year lease, subordinate to any deeds of trust or mortgages placed on the property

unless mortgagee or beneficiary elected to have the lease be superioro Encumbered property with 2nd deed, defaulted, foreclosed, trustee sale Dover purchasedo Fiber said foreclosure extinguished lease and was only month to month now, Fiber gave

notice of Intent to Vacate, Dover sued for rent and conversion Lower court rules for Fiber- Issue: Is a lease extinguished with foreclosure?- Holding: Trustees sale extinguished the lease, thereby allowing 30 days notice to vacate

o A lease is generally deemed subordinate to a deed of trust if the lease was created afterthe deed of trust was recorded

o That creates the possibility that the lease could be extinguished by foreclosure Non-disturbance agreement

o Notes Senior vs. subordinate leases - whether a lease is senior or subordinate to a

foreclosure mortgage can have significant consequences for both the lessee and the

foreclosure sale purchaser (If recorded, is superior to the mortgage some statesdoesnt matter)

Priority Preferences


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Normally assume that a tenant desires protection against a foreclosure wipingout lease rights

Varying priorities by agreement Subordination agreementan act by which one having an interest in

particular real estate consents to a reduction in priority as against another

holding an interest in the same real estate Nondisturbance agreementa mortgagee holding a senior lien agrees that

in the event of foreclosure, the foreclosure purchaser will permit the lease to

continue and allow the tenant to remain on the leased premises so long as thetenant continues to comply with the terms of the lease and is not in default.

Attornmentused to readjust the relationship of the parties. Tenant agrees ifinterest is transferred by deed or foreclosure, tenant is bound to the newpurchaser as if it were the original landlord (kind of like assignment)o all three may be combined in a subordination, non-disturbance,

attornment agreementIII. Transfer and Discharge

A. Transfer of the Mortgagors Interest- Many ways to finance1 way is to have the purchaser take over an existing mortgage loanon the propertyo Title is transferred, mortgage stays, might get a 2nd mortgage to pay off the balance of the

loan being taken over PROS: low interest rates, avoid closing costs (but beware of due on sale clauses

benefits no really realized with these and almost all mortgages have them!)o Two methods to take over (1) Assuming the Mortgage (2) Taking subject to it

1. Middleton v. Hancock(Former Owner v. Subsequent Owner) I agree to take over I promise to pay

o Facts: Middleton sold Midgate plaza, a strip mall to Hancock who agreed to take overthe payments on the mortgage on the property. However, Hancock (D) did not executeany mortgage assumption agreement and when the property was no longer profitablestopped making mortgage payments. Bank told Middleton to pay up, he did and thensough reimbursement from Hancock and foreclosure.

o Issue: (1) Does a purchaser of property assume liability on a loan secured by a mortgagewhere the purchaser agrees in the contract to take over payments on the loan but does

not otherwise expressly assume the mortgage? (2) Does an original mortgagor haverecourse through subrogation when there isnt a mortgage assumption agreement, notforeclosed yet, and mortgagor is willing to pay the entire debt?

o Rule: (1) A purchaser of property does not assume liability on a loan secure by amortgage where the purchaser agrees in the contract of sale to take over payments on

the loan but does not otherwise expressly assume the mortgage. (2) They do haverecourse through subrogation


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The Suretyship Relationship - The principal surety principle governs the relationshipbetween the mortgagor and the grantee. If grantee assumed mortgagor cansubrogate, ask for reimbursement, and exonerate

Options for principalsurety;o Reimbursement (Recovery from grantee); Exoneration (Court ordered payment of

mortgage by grantee, Kind of specific performance) SubrogationMortgagor can sue the grantee on the note and foreclose if the

mortgage hasnt already been foreclosed by the mortgagee. Disadvantage isthat it is not available for partial payments

Reimbursement- (need assumption) Entitled to reimbursement from grantee ifthey pay, provided they assumed the obligation. Also can get incidentals, fullpayment isnt necessary like in subrogation. But reimbursement is insecuredand if grantee is insolvent or disappears..SOL

Exoneration- (need assumption) may obtain court order making grantee pay.Specific performance of the assumption agreemento ALL THREE AVAILABLE IF ASSUMPTION AGREEMENT

- Noteso Mortgagor liability to government agencies FHA and VA insure or guarantee some types of mortgage loans. They assure

mortgage lenders that if foreclosure, lender will not sustain a loss

Procedures to approve buyers to mitigate risks through HUD Seller needs to obtain release from liability from lender, otherwise can still

be liable for debt and government can sue for a deficiency! Bullhonkey!o Assuming grantees assertion of defenses

Grantee is stopped to raise defenses because that would constitute unjust enrichment(even if original mortgagee defrauded the original mortgagor)

o Subject-to grantees assertion of defenses Some situations allowed defenses, ex. If property was a gift

o Nature of the Mortgagees Right against the Grantee Mortgagee (lender) can recover because they are a third party beneficiary Grantee must have a direct liability to the mortgagee

"Subjectto"

An assumption is a promise by the puchaser to make thepayments and perform the other covenants in the noteand the mortgage

must be express

even if original mortgage contains "promise to pay"

binding "successors and assigns" of the property thatcovent wil not run w/ the land and become bind on afuture owner in the absence of an assumption; anexpress promise is required

Promise doesn't have to be written, but can be in thecontract of sale, deed or other document

Does the agreement to "take over" also establish an

express promise to pay?


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Circular logic, criticized b/c contract between 2 parties creates enforceableright in a third

o Recission of the assumption agreement HELP? WHAT DOES THIS NOTE SAY?!

o Break in the Chain

Sometimes the sales include many parties, if it is found that B didnt actually assumeanything then the latter parties (C,D,E) will have assumed nothing also.

2. Suretyship Defenses- Transfer-Created Suretyship

o Suretyship: the obligation of a person to answer for the debt of another. A surety orguarantee, in finance, is a promise by one party (the guarantor) to assume responsibilityfor thedebtobligation of a borrower if that borrower defaults. The person or companythat provides this promise, is also known as a surety or guarantor.

o Upon mortgagors (Buyer) transfer of real estate mortgagor becomes a suretyo Where does principal obligation lie?

With grantee IF there is an assumption With real estate IF no assumption

- Morgagor is not released from primary liability unless expressly released by Mortgagee- Surety is released from duties when the deal changes in way that impairs the suretys

positiono Changes include

Releasing the grantee from personal liability Releasing some or all of the real estate from the

mortgage

If mortgagee releases all of the realestateo Minorityreleased to extend of

value of land releasedo Majoritymortgagor is

completely discharged If only a portion of real estate released

Mortgagor discharged to extend security now inadequateto cover debt.

Impairing the lenders right to realize on the security of the mortgage Modification of Obligation (modifying interest rate or terms of payment)

Majority a total discharge if assumptiono If subject to, discharge is equal to value of real estate

Minority & Restatement discharge only to extent modification wouldotherwise damage mortgagoro what types of modifications would result in no discharge under this

rule or extending the time maturity of the loan

Majority completely discharges mortgagor if grantee assumedo If grantee took subject to, discharge to exent of value of land at time of

extension

Suretyship Defenses

Mortgagor may be discharged based oMortgagees actions that:

Have made it lesslikely Grantee orland will satisfy

debt

Have made it mordifficult forMortgagor to asse

recourse againstGrantee and land
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Restatement discharge only to extent time extension would otherwisecause loss

3. First Federal Savings and Loan Assn of Gary v. Arena(Mortgagee v. Mortgagor)

- Facts: Bank contracted with Grantee to alter the terms of the note and then sought to holdthem to the modified terms- Issue: Can a lender contract with purchaser of a mortgaged property to alter the terms thenhold the mortgagor to the new terms?

- Rule: A lender/mortgagee cannot contract with a vendee of mortgaged property to alter theterms of the note and then hold the mortgagor to the new terms of the noteo Mortgagor = surety

- Noteso Extent of the discharge

After a subject to transfer, an increase in the interest rate w/out grantors consentdischarges the grantor to the extent of the value of the property

After an assumption totally dischargedo

Effect of modifications and time extensions on the mortgagor Mortgagor is entitled to any advantageous modifications, but not bound by any

disadvantageous oneso How can mortgagees avoid the suretyship defense?

1) survival clause/waiver of defenses clause clause that preserves 2) obtain the mortgagors consent to the modification after the mortgage is entered

into, but before the modification is made 3) obtain consent after the modification is made

B. Restrictions on Transfer by the Mortgagor1. The Due-on Clauses

- Due On Sale Clausemortgage provision that affords the mortgagee the right to acceleratethe mortgage debt and foreclose if the mortgaged real estate is transferred without themortgagees consent

a) Due-on-Encumbrance Restrictions- Alternative to due on sale clause. This type of clause authorizes the lender to accelerate the

debt if the mortgagor further encumbers the real estate.o Used mainly to protect against impairment of mortgage security by a debtor who incurs a

junior mortgage debt and thus reduced his or her economic stake in the real estateb) Increased-Interest-on-transfer-clauses

- Authorizes the lender to increase or adjust the mortgage interest rate in the event of a transferby the mortgagoro Unlike due on sale clause it does not confer an absolute right to acceleate the mortgage

debt upon transfero Only if transferee fails to pay the increased payments default + acceleration can occur

c) Installment Land Contract Prohibitions on Transfer- Prohibits assignment by the vendee w/out permission, violation = default and might result in

vendor termination of the contracto Different from due on sale b/c that would at most trigger an acceleration of the mortgage

debt


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d) Events Triggering Acceleration- Sale, but also broader than that, even a short-term lease or a grant of an easement or other

limited interest in the land would suffice to trigger the lenders right to accelerate

(1) Judicial and Legislative Responseo No court held that a due-on-sale clause was per se unlawfulo Clause was deemed per se reasonable unless the borrower could show that the lender had

engaged in unconscionable conduct States imposed legislative limitations on due-on-sale clauses 1976Federal legislation for due-on-sale clauses 1982 federal preemption of state laws due-on-sale clauses

Make such clauses generally enforceableo Lenders covered: all federal banks, HUD, etc, doesnt apply to private

bankso Loans covered: not limited to residential loanso Installment Land Contracts: doesnt specifically mention them, its

preemption does applyo Transfers in Which Due-on-Sale Enforcement Is Prohibited: several

types of transfers that may notbe used as the basis for due-on-saleacceleration

Creation of junior mortgages Transfers incident to divorce At death, inter vivos to certain relatives Leases for three years or less with no option to purchase Less than 5 dwelling units

Waivers by LendersLenders can and frequently dowaive their right to accelerate, commonly waiver isgiven in exchange for assumption fee

Concealment of transfersno duty for borrower todisclose to the lender that a transfer is taking place.

Concealment by lawyersethical implications ofconcealment, breach of contract lawyer should avoidassisting or advising such a transfer

C. Transfer of the Mortgagees Interest

- Secondary market transactions generally fall into four categorieso 1. Outright sale to an investor who will hold the mortgage in its portfolio

MR ME InvestorNote and Mortgage Endorsement of Note Ass. Of Mort

One Lender sells/assignsto another

Lender

"Investor"

SecondarySale

(Secondary

MortgageMarket)


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May involve single large mortgage, or pool of smaller mortgageso 2. Partial Assignments (participations) sold to multiple investors

MR ME Investor Inv1, Inv2, Inv3Note and Mortgage Endorsement of note Ass. Of Mort Sale of Participations

Investor retains a portion of ownership of the note and mortgage, but sellspartial interests to other investors.

Commercial banks and savings banks often engage in this sort of transactionsas a way of diversifying their portfolios and reducing risk

o 3. Sale of mortgage-backed pass-through securities MR ME Issuer Inv1, Inv2, Inv3

Guaranty

Investors purchase bonds or other securities, issued by the secondary marketinvestor, and collateralizedby the mortgage or mortgagees. Payments arepass-throughs corresponding to pro rate payments on the underlyingmortgages

o 4. Sale of multiclass mortgage-backed securities MR MEIssuer Inv1, Inv2, Inv3Sales of multiple classes of securities

Securities are widely sold and traded in the capital markets, not usuallypass-throughs but instead represent a variety of combinations of principaland interest payments which can be covered by the borrowers on theunderlying loans.o Often major Wall Street Investment Bankso Low interest rates so could investments

Partially led to mortgage collapse- Residential mortgage industry restructured into three components: mortgage brokers,

wholesale lenders/securities issuers and securities investors

D. Discharge of the Debt and Mortgageo Paid off by either primarily responsible or others

Typically mortgagor is primarily responsible If the real estate is sold, the grantee becomes primarily responsible

Need a document discharged the mortgage Different names: release, satisfaction-piece, discharge, reconveyance Statutory penalties for lender that fails to provide such a document

Usually, only a complete payoff will extinguish a mortgage Sometimes there is a partial release clause

Examples of those not primarily responsible who pay off mortgages Original mortgagor who has transferred the land subject or w/ an assumption,

holder of a junior mortgage or junior lien, tentant under a subordinate lease,

even people holding easements

o It doesnt extinguish the mortgage but instead assigns both theobligation and the mortgage to the payor


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Why would someone want to payoff? gain control of theforeclosure process

Tender: needs to be cash or good funds, promissorynote wont be good enough, tender must also be

unconditional

o Payoff Letters Statement w/ the amount owing, current interest rate, etc. Request must be made for good cause Mortgagee who fails to disclose w/in certain time after such a

request is liable for damages

o Prepaymentmortgagee has a common law right to refuse an earlytender or prepayment of principal or interest

Unanticipated prepayment can result in greatly increased taxliability

Sometimes include lock-out mortgage provisions thatprohibit prepayment for a fixed period of time Perfect Tender in Time Rule

lock-out clause is unnecessary, since no lender everhas a duty to accept a prepayment unless mortgage/note

allows prepayment

Many charge a prepayment penalty (interest penalty?)1. Westmark Commercial Mortgage Fund v. Teenform Associates

- Noteso Language permitting prepayment

Boilerplate phrases can allow prepayment if payment of x dollars or moreo Types of Prepayment Clauses


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Most allow prepayment but with a penalty, not as common in residential, but morewidely used in loans on commercial property

Many types of formulas including fixed %s, yield maintenanceo Attacking prepayment fees

Court will refuse to enforce only if it shocks the conscience

Occasionally a borrower will try to convince a state court that a prepayment fee is aform of excessive interest argument almost always failso Prepayment caused by the mortgagees acceleration

Sometimes prepayment occurs because lender accelerates the debt Acceleration upon default

When the mortgage clause clearly applies the fee to prepayments resultingfrom acceleration for default the courts will enforce it.

Acceleration by virtue of payment of casualty insurance or eminent domain proceeds Acceleration under a due on sale clause

o Prepayment fees in bankruptcyis the fee collectible in bankruptcy? There has been a lot of Judicial scrutiny of yield maintenance clauses

oStatutory Limitations on residential prepayment fees FHA/VA loans can be prepaid at anytime Statutes vary

o Theories of Attack Both late fees and default interest are subject to attack as they represent attempts to

liquidate damages Might violate usury statutes

o Unconscionability as a standard UCC 2-302

o Rationales for late fees and default interest Administrative costs

oWhat default rate is excessive? 3-4% are okay, much larger will be struck down. All over the board

o What amount of late charge is excessive? 5-6% as in Westmarkupheld, fees based on outstanding principal of the loan may be

struck downo Effect of acceleration on late feeso Statutory limitations on late fees

Required that fee is calculated on amount of late installment not on principalo Federal regulatory limitations on late fees

Prohibited late payment penalties on home loans in excess of 5% of the amount ofthe late installment

o Late fees and bankruptcy Secured claim or not?

2. Devlin v. Weiner


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Devlins convey land to Weiners in exchange for the payoff of a mortgage and threebuilding options, all valued at $84,000. This is a valid form of consideration.

- Noteso Definiteness of obligation

Needs to be definte enough to put anyone interested in the inquiry upon a track toleading to discovery

o Non-monetary obligations If it cannot be reduced to money equivalent it cannot be secured by a mortgage

o Support Mortgages Mortgages with financial support and promise of love, affection, kindess or other

emotional stuff will only be enforced as to the former and not the latter.

IV. Misc. Foreclosure Methodso Two methods of foreclosure, primary is judicial foreclosure accompanied by judicial sale.

Available in every state and only type available in some Half use power of sale Strict foreclosureforeclosure is in court, but no judicial sale, mortgagor is given a

period of time by the court to pay the debt. Failure to do so will result in the property

besting in the mortgagee w/out sale

Constitutionality of strict foreclosure? Other (new England based)


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o Entry w/out Processo Actions at Law for a Writ of Entryo Scire Facias

A. Judicial Foreclosureo Judicial foreclosure required where there is a serious lien priority disputeo Needed if there is an absolute deed because those dont contain a power of sale

- Noteso Necessary-Proper Party Distinction

Foreclosure should terminate the rights of all interested parties who are subject tothe mortgage

Give the foreclosure sale purchaser essentially the title to the land as it stood at thetime of the execution of the mortgage

The reason judicial foreclosure does not terminate unjoined junior interests isconstitutional

o Impact of Foreclosure on Senior Interests Senior liener is not a necessary party because he or she is not subject to or

subordinate to the mortgage being foreclosed

Senior lienors interest will not be terminated or otherwise prejudiced by thejunior foreclosure

Is a senior a proper party? A senior lienor may be brought in involuntarily for certain limited purposes.

Sometimes they are made a party just to ascertain the amount and terms of

the senior lien

o The Junior Lessee as a necessary party Where a lease is senior to a mortgage, the lessee and lease are unaffected by a

foreclosure. The purchaser at the sale obtains the mortgagors interest and becomes

the lessees landlord.

Since the lessee is unaffected by the foreclosure, the lessee is not a necessary partyin a judicial foreclosure proceeding

pick and choose states re which leases live or die1. Real Estate Finance Law

- General rule is that lack of knowledge or notice of the subordinate interest of another personin the mortgaged land does not excuse a mortgagee from making such person a party in thesuit

o If excluded not subject to the decree Limitations on this Rule

Bona Fide Purchaser will take free of interest if it is equitable only if there is an outstanding unrecorded interest, buyer at a foreclosure sale who

doesnt know about it takes free and clear


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o Policy: protect both the forclosing mortgagee and purchaser Lis Pendens Doctrineprotects BFP, foreclosing mortgagee

a) The Omitted Party Problem- If a party is omitted, there interests are not terminated by that foreclosure

o The foreclosure is void and their redemption rights are the same as beforeo Succeeds to the rights of the lender and to the rights of the owners

Rights of omitted owner: if omitted party is owner of the entire redemption interestthe foreclosure sale is entirely void but the foreclosure purchaser stands as assignee

When the omitted owner redeems any further interests in the land are cut off Rights of omitted lienor: junior lienor still has an equitable redemption right

Foreclosureforecloses his or her own lien, with a resulting judicial sale Redemptionjuniors power to compel an assignment to him or her of the

senior lien. Basically Junior tenders payment owing on the senior lien

subrogated to the senior mortgagees rights

Rights of Foreclosure Purchaser Redemption Re-Foreclosure Strict Foreclosure

2. Citicorp v. PessinHolder of First Mortgage (P) v. Junior Lienholder (D)

Facts: P held a 1st mortgage on property, filed to join junior lienholder D in aforeclosure. P filed a strict foreclosure action to extinguish the lien.

Issue: When a junior lienholder is omitted from a foreclosure action, may asubsequent strict foreclosure action terminate the lien

Rule: When a junior lienholder is omitted from a foreclosure action, asubsequent strict foreclosure action may terminate the lien

Holding: Purchaser who purchases in good faith is entitled to file a complaintto force the junior lienor to redeem the first mortgage or lose its rights, it putsthe junior lienor in no worse position and so is not prejudicial.o Sale under a first mortgage will terminate all junior interests, notably

junior mortgages. Consequently, a junior lienholder to save his

interest must either buy at the sale or redeem. Strict foreclosure exists

to allow the purchaser to extinguish after-the-fact the lien of an

omitted party. Court may, but doesnt have to allow a right ofredemption

- Noteo Strict Foreclosure

Most jxns only provide strict foreclosure if P establishes that he bough in good faithw/out knowledge of the outstanding interest and that its holder knew of the sale and

permitted the P to buy without disclosing his or her own interest


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Citicorp follows a flexible equitable approachEquitable Redemption v. Statutory Redemption

Redeeming under statutory right = fee title to

the property

Equitable right = assignment of a revived first

lien

Pays price at original foreclosure sale Pays balance owed on the first lien

Fixed time period No specific time period, doctrine of laches

Statutory redemption only begins after theinterest is foreclosurelast chance forcreditors to regain the property

Equitable redemption only exists until theinterest is foreclosured

3. Portland Mortgage Co. v. Creditors Protective Assn Facts: Creditors Protective Assn (D) held a junior lien on the property onwhich Portland Mortgage Co. (P) help a mortgage, but it was not made a

party to the action to foreclosure the mortgage.

Issue: Can a junior lienors redemption rights be extinguished by the partywho purchases the property at foreclosure sale by paying off the debt forwhich the junior lien is security?

Rule: One who purchases property at a foreclosure sale may extinguish ajunior lienors right to redeem it by simply paying the debt for which the

junior lien is securityo Junior lienor has right to redemption, not absoluteo D would acquire the senior mortgage as a protection of its interest

4. Land Associates v. Becker Facts: P brought a foreclosure action concerning real property, went forward

without lienholders being joined. They assigned their interests to P who triedto redeem land, lower court held she had no statutory right of redemption

Issue: does an assignee of lienholders have a statutory right of redemption ifthe assignors were not lienholders of record when the foreclosurecommenced?

Rule: An assignee of lienholders has a statutory right of redemption ifthe assignors were not lienholders of record when the foreclosure action

was commenced

Holdingforeclosure triggered lis pendens, binding all lienholders to theforeclosure, thus allowed their redemption rightso Main difference in this case and Portlandinterests in this case

arose after foreclosure and thus lienholders bound by the

foreclosure. In Portlandthey were not bound by the foreclosure andthus had no statutory right of redemption, only equitable.


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B. Power of Sale Foreclosure1. Generally

- Power of Sale Foreclosure: allowed in 60% of jxnso Notice property is sold at public sale by public official, third party, or mortgageeo Not usually judicially supervised

Policy: Motgagee accomplishes the same purposes achieved by judicial foreclosurewithout the substantial additional burdens that entails

Purposes: terminate junior interests, prove sale purchaser with good title,cheaper than judicial foreclosure

o Title has been somewhat less reliable than that from judicialforeclosure

2. Defects in the Exercise of Power of Sale ForeclosureBaskurt v. Beal (Trustee v. Debtor)

- Facts: Mortgagor sought to set aside a foreclosure sale on her property after it was sold atless than 15% of the fair market value and the trustee failed to properly protect her interests

by selling only as much of the property as necessary to pay off debt

- Issue: Can a foreclosure be set aside if the price was extremely disproportionate to the fairmarket value of the property?

- Rule: A foreclosure sale must be set aside if the price paid was grossly inadequate whencompared to the fair market value of the property on the date of foreclosure and the

proceedings of the sale were defective.

o Foreclosure was voidable (void usually only when criminal activity/fraud)

- Noteso State court remedies to attack power of sale foreclosure

Three remedies available to challenge the validity of a power of sale foreclosure 1) injunction suit against a pending 2) suit in equity to set aside a sale 3) action for damages against the foreclosing mortgagee or trustee

o Can be used by the mortgagor but also by those w/ junior interests Availability of remedy depends on several factors

When defect is discovered, nature of the defect,completion of the sale, existence of a BFP

o Tender requirement some jxns want mortgagor seeking injunctive relief to pay amount due on

mortgage

o One who seeks equity must do equityo Common Foreclosure Defects


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Challenge the right of the mortgagee to foreclose Due process challenges

Intentional and negligent chilled bidding, improper place or time of sale,defective notice of sale, selling either too much or too little of the mortgage

security

o Void-Voidable Distinction Voidno title is passed (ex., foregery, invalid acceleration) Voidable (most fall under this category)

Bare legal title passes to the sale purchaser, subject to the rights ofredemption of those injured by the defective exercise of the power of sale

Neither void nor voidable Minor typographical errors, errors that dont prejudice the parties

o Who is a BFP? Sale purchaser is unrelated to the mortgagee, should still take title if

1) had no actual notice of the defects 2) Not on reasonable notice from recorded documents 3) defects are not such that a person attending the sale exercising reasonable

care would have been aware of the defect

Mortgagee cannot be a BFPo Trustee as fiduciary

Represents the interests of both mortgagor and mortgagee Described as a common agent of both parties

o Trustee obligation to verify default No affirmative duty to investigate and verify debt

o Trustee as Foreclosure Purchaser May not purchase for the sale they conduct, unless express consent

o Trustee Closely related to mortgagee-purchaser Wont by itself invalidate a sale, but might result in closer scrutiny

o Inadequate foreclosure price Most commonly raised, least effective

Conscience shocking test Must be evidence of irregularity, misconduct, fraud or unfairness to set it

aside

Grossly inadequate standardmay invalidate when less than 20% of fairmarket value

o Sales by parcel or in bulk need to adopt mode of sale most beneficial to the mortgagor, generally favors selling

in parcels

Most statues have handled this by statute


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o Chilled bidding: Irregular conduct by a mortgagee or trustee that suppresses bidding isoften characterized as chilled bidding

In Re Edry

- Noteso Bankruptcy court and state law

Bankruptcy court is used by debtors to attack foreclosure proceedings under the hopethat the court will be sympathetic to the debtor.

o Power of sale in mortgagee Many states hold that if a mortgagee forecloses on a mortgage and purchases the

property at the sale, the sale is voidable. Thus, the DoT is often used in the US.

States allowing mortgagee to foreclose require they act in good faith and must usereasonable diligence to protect the interests of the mortgagor


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o Damages for wrongful foreclosure If foreclosure has defect but property was purchased by BFP, mortgagor may

commence an action against mortgagee for damages:

The difference between the market value of the property and the aggregateamount of liens thereon as the date of sale; or

The value of the mortgagors equity in the property at the time of the sale. Mortgagor may commence an action to recover the property and for damages

resulting from the wrongful behavior of the mortgagee.o Action for damages v. suit to set aside

Generally mortgagor may chose to recover the property or bring an action for fulldamages if mortgagee incorrectly forecloses.

o Damages for attempted wrongful disclosure Some states allow an action for attempted wrongful foreclosure but many are

reluctant to extent liability in an area where damages are speculative and subject to

abuse.

o Suits for damages by others Third party may bring action for deceit but may not bring action if there was conspiracy

between mortgagee and trustee to ensure mortgagee would be purchaser of property.

o Trustee or mortgage liability to foreclosure purchaser Generally foreclose purchaser takes a property subject to prior liens and interests

accrued prior to the sale.

o Need a valid underlying obligation, if note is a forgery no valid underlying obligation Makes it void

Need to always first look at if VALID UNDERLYING OBLIGATIONDefects Making Sales Void Defects Making Sales voidable

Mortgage was a forgery Minor errors in publication ofnotice

Debt never existed Chilled bidding- Reduces bidders

Mortgagee did not hold debt Bidding by trustee (in somestates)- Breach of Fiduciary- Duty of Good Faith- Self-dealing

Debt was not yet due Improper time or place- Might not provide proper

noticeDebt has been paid Gross Inadequacy of Price

- Not enough in and of itselfProblem- 1st Mortgage $10,000- 2nd Mortgage $5,000- 3rd Mortgage $3,000- FMV = $20,000


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o 2nd Mortgage is foreclosedo Mortgagee 2 purchases property for $4000

3. Glidden v. Municipal Authority of Tacoma Facts: D appealed grant of Old Stone Banks motion for summary judgment

quiting title of land to Glidden and sold without realizing that juniorlienholders ahd not been given proper notice of sale upon the debtors defaulton debts securied by the property

Issue: Is the degreed to which a purported BFP must inquire into foreclosureprocess a question of fact?

Rule: yes, the degree to which a purported BFP must inquire into flaws in theforeclosure process is a question of fact which must be determined from ananalysis of the circumstance s in each particular case

Holding:- Notes

1. Presumption Statutes Like WA several states have presumption statutes, trying to enhance thefinality of power of sale foreclosure and the marketability of titles they

produceo Three general categories

Rebuttable presumptions: contains neither conclusivepresumption language nor any specific protection for BFPs, affew of these statutes deal only with notice requirements and notother aspects that might be carried out improperly

Conclusive presumption for BFPsNotices Onlyincluse ofappropriate recitals creates a conclusive presumption in favorof BFPs but this presumption extends only to notice

requirements for sale Conclusive presumption for BFPsall aspects of foreclosure

WA statute is good example of this

Trys to protect BFP from notice and other proceduraldefects in the foreclosure process

o WA statute was amended afterGlidden

2.Intentional omission of junior parties in a power of sale foreclosure Can a junior lease by kept alive in the power of sale context by intentionally

not giving them statutory required notice?C. Reacquisition of Title by Mortgagor and Related Issues

- Redemption is used to allow the defaulting mortgagor a final opportunity to regain hisproperty. It holds up the alienation of the property after foreclosure and is thus disfavored by

mortgagees. The government insists upon redemption rights when it is a junior lienholder.

1. Old Republic Insurance Co. v Currie(Mortgagee v. Mortgagor)


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Facts: D, who had filed for bankruptcy and thereby lost his home throughforeclosure, later reacquired the same property, preempting the lenders

assignee Old Republic to claim that the mortgage had been revived.

Issue: if the mortgagor is the purchaser at a foreclosure sale or subsequentlyreacquires the property, are the junior mortgages revived as liens on the

property? Rule: If the mortgagor is the purchaser at a foreclosure sale or

subsequently reacquires the property, the junior mortgages are revived

as liens on the propertyo Three theories holding reacquisition revives mortgage

1) payment theory: when the mortgagor purchases the propertyat the sale, the mortgagor is in effect paying the first mortgageand the second mortgage moves into first position

Mortgagor could profit by its own wrong in failing topay when $$ due

2) Covenant defend title theorysecond mortgage that isrevived usually contains a warranty that the mortgagor agreesthat he will defend the title against all lawful claims

Permitting 1st foreclosure of 1st mortgage is a breach ofwarranty to defend the title

3) warranty of title theorybased upon warranty of titlecontained in the 2nd mortgage. Mortgagor has warranted thatthe mortgaged premises shall be security for the debt and thatthe mortgagor will produce the property if the debt is not paid

after-acquired title doctrine/equitable remedyo Inures to the benefit of the

mortgagee

o Even if personal liability isextinguished, warranty obligationstill exists to produce the property

- Noteso Moral Issues

Intuitive notion of fairnessthis person should not be able to profit by his or herviolation of an obligation

o Reacquisition by non-recourse mortgagor or subsequent grantee


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Even where the mortgage obligation is completely non-recourse, the mortgagoragrees to the satisfaction of that obligation

Assuming grantee is still in the position to be reacquired against, as for subject tograntee there is strong policy that they are also still subject to the liens otherwisethere might be unjust enrichment

oMortgagor reacquisition from a BFP There are good reasons to allow the mortgagor to reacquire title from a BFP free and

clear of foreclosed interestso Acquisition of title by junior interest holders

Generally, when the holder of a junior interest purchases at a senior foreclosure salethere is no revival of other junior interests

Valid purchase cuts off rights both the holder of the equity of redemption andother junior interests

D. Statutory Redemption- Under statutory redemption, the redemption amount is normally tied to the foreclosure sale

price rather than to the mortgage debt, as is the case with respect to equitable redemption.o Mortgagor will usually have the right to possession

Some states only available after power of sale foreclosure, others only after judicialforeclosure

Three approacheso Strict Priority or Ordered Redemptiono Scramble Method

No priority order in which redemptions may be made from thepurchaser, each pays the one before it and then they have no

further redemption rights

1. United States v. Stadium Apartments, Inc. Facts: Some housing gets built in Idaho, with funds from the feds (post

WWII). Mortgages contract to waive redemption rights. The housingcomplex defaults. The foreclosure happens, but the district judge appliesIdaho law, which grants a 1-year period of redemption. The feds appeal.

Issue: Do state redemption statutes apply when the Federal HousingAuthority forecloses on a mortgage that it guaranteed?

Rule: The court held that FHA-insured mortgages are foreclosed underfederal law, preempting any state redemption provisions.

- Noteso No statutory redemption under Federal Foreclosure Acts

Federal government views statutory redemption as contrary to its interest as amortgagee no rights of redemption under several federal acts

Policy = gov doesnt want to hold onto properties/mortgages for long periodsof time

o Federal government as junior lienor US, by statute, gets 1 year from date of sale within which to redeem If state law isnt as generous, federal law preempts


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o Improvements by purchaser during the redemption period Generally, not going to get reimbursed for improvements, goes against policy of

redemption statute

2. Farmers Production Credit Association v. McFarland

Facts: junior lienholder FPC, attempted to redeem property already redeemedby the mortgagors assignee

Issue: may a junior lienholder redeem property, foreclosed upon by the seniorlienholder during the period giving the mortgagor sole redemption rights?

Rule: a junior lienholder may not redeem property foreclosed upon by thesenior lienholder, during the period giving the mortgagor sole redemptionrights

- Noteso 1. Lien revival after statutory redemption

Courts take a variety of approachs to lien revival Many allow for revival when the mortgagor or her successor

Redeems, some states, like CA, do not allow for revival of junior lienorso 2. Assignee of mortgagor as redeeming party

Generally the Mortgagors Statutory right of redemption is assignable. Jurisdictionsvary as to whether junior liens revive against the redeeming assignee.

o 3. Redemption by junior lienor Other junior liens generally do not survive if another junior lienor redeems.

E. Anti-Deficiency Legislation and Related Problemso If Mortgage goes into default and the obligation is accelerated there are only two options

(1) obtain a judgment on the personal obligation and enforce it by levying upon anyof the mortgagors property and, if deficiency remains force on the real estate for the

balance (2) forceclose on the property first and if the proceeds are insufficient to satisfy the

mortgage obligations obtain a deficiency judgment

Some states make you elect which option, some states leave both available

- Limitations of Deficiency Judgmentso Many states impose strict notice requirements and time limits on the mortgageeo One Action rules

Mortgagees only remedy on default is foreclosure and must obtain any deficiencyjudgment incident to the foreclosure proceeding.

o Power of Sale Foreclosures security first principle Power of sale is a condition precedent to a subsequent action at law for a deficiency

o Fair Value legislation Designed to deal with depression conditions

WA does have theseapplies only to judicial foreclosureso Appraisal Statutes


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Requires the court or the person conducting the foreclosure sale to appoint anappraiser who determines the value of the property

- California Anti-Deficiency Regulatory Schemeo more complex and pervasive than any other jxn

In states with anti-deficiency laws, e.g., California, borrower not subject to adeficiency judgment after foreclosure has effective nonrecourse loan.

Proponents argue anti-deficiency rules allow borrowers to get a clean startafter foreclosure; and

Anti-deficiency rules create meaningful incentive for lender to acceptreasonable modification terms.

Opponents argue because mortgagor can walk away from mortgagewithout personal liability, the mortgagor may have incentive to overpay (or

buy more house than mortgagor can afford, hoping to refinance if prices goup), thus creating too much leverage for the borrower.

1. Deberard Properties, LTD v. LIM(purchase money creditor v. purchase money debtor)Facts: Lims defaulted on obligations secured by a deed of trust held by a bank and be a deed oftrust held by Deberard from whom they had purchased a shopping center and paid a large downpayment. They renogitated and executed a forebearance agreement. As part of the agreement, theLims waived the protection of 580b against deficiency judgments. Defaulted again and P filedsuit on the obligations it was owed.Issue:Rule: A purchaser, after defaulting in a purchase-money secured land transaction, cannot waivethe protections provided in Californias Code of Civil Procedure 580b against deficiency

judgments.

- Noteso Waivers of 580bvirtually all post-default waivers of 580b are unenforceableo Refinancing purchase money home mortgages580b not only bars deficiency judgments

in favor of vendor-mortgagees but also as to a a deed of trust, etc. basically virtually all

California homeowners are protected against deficiency judgments

Loans are non-recouse, mortgagors are not personally liable Many lose this protection when they refinance

2. Talbott v. HustwitRule: The protection of anti-deficiency statutes applies only to actions for recovery of deficiency

judgments on the principal obligation, and not to guarantors of that obligation.

o 580a applies only to actions for recovery of deficiency judgments and not actions againsta guarantor

o Guarantor = removed from status and obligations of debtors/ trust arrangement- Notes

o Section 580a Fair Value Limitation


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If a junior lienor does not participate in the foreclosure process by bidding on theproperty, they are not allowed to bring a deficiency judgment against the debtor.

o Impact of 580a on Power of Sale Foreclosures on Multiple parcels If a mortgagee forecloses on multiple parcels of land, guarantors cannot argue that

the foreclosing party must give fair value for each parcel, since it would derogate the

goal of providing a quick , inexpensive, and efficient remedy.

o Actions for fraud and anti-deficiency legislation Most courts are reluctant to allow anti-deficiency statutes to be a shield for fraud.

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