April 3, 2014 – – The law firm of Schaefer Halleen, LLC, is pleased to announce that on April 2, 2014, the Minnesota Supreme unanimously handed down a decision that gives the firm’s client, a homeowner who lost her house to foreclosure, the right to sue the servicing company that was handling her mortgage. This company violated a number of rules requiring it to give her a chance to arrange for a revised payment schedule that would have allowed her to keep her home. But under Federal law she couldn’t do anything about it herself. Minnesota state law does give her this right, but the trial court and the Minnesota Court of Appeals found the statute ambiguous and ruled against her. The State’s Supreme Court unanimously reversed, which is a great victory for Minnesota homeowners caught up in the financial fallout from the Great Recession. Schaefer Halleen Senior Attorney Bert Black helped brief the case, which was argued to the Court by Tim Thompson of the Housing Preservation Project. Minneapolis attorneys Richard J. Fuller and Randall Smith also worked on the case.
Type of Client: Individual Homeowner
Legal Issue Appealed: Whether a homeowner has a right under Minnesota law to sue a mortgage servicing company that violates rules about procedures for avoiding foreclosure. Under the rules, a homeowner has to be given a chance to work out a revised payment schedule before the servicing company can foreclose.
Our Approach: The federal rules involved do not provide for a private right of action. So under federal law, even a homeowner who’s been grossly mishandled by the servicing company has no recourse. But Minnesota law gives homeowners the right to sue under certain circumstances. The trial court and the Minnesota Court of Appeals held this law was ambiguous and inapplicable.
The Result: In a unanimous decision the Minnesota Supreme Court reversed and held there was no ambiguity, and that our client could proceed with her lawsuit against the servicing company that had improperly foreclosed on her house.
“Although recent changes to the law give homeowners much greater protection from foreclosure, banks have often ignored the new rules. In Minnesota, at least, this decision will give homeowners a much better chance to fight back.”
Bert Black, Senior Attorney, Schaefer Halleen