Thursday, March 09, 2017

mortgage insurance - HAMP modification - extension of insurance premiums not proper

Fried v. JP Morgan Chase – 3d Cir. – March 9, 2017


Ginnine Fried bought a home in 2007 for $553,330. It was near high tide in the real estate market, but she had to believe she was getting a bargain, as an appraisal estimated the home’s value to be $570,000.

Fried borrowed $497,950 at a fixed interest rate to make her purchase and mortgaged the home as collateral. Because the loan-to-purchase-price ratio ($497,950 / $553,330) was more than 80%, JPMorgan Chase Bank, N.A. (“Chase”), the servicer for Fried’s mortgage (that is, the entity who performs the day-to-day tasks for the loan, including collecting payments), required her to obtain private mortgage insurance. Fried had to pay monthly premiums for that insurance until the ratio reached 78%; in other words, the principal of the mortgage loan needed to reduce to $431,597, which was projected to happen just before March 2016.

We now know that the housing market crashed in 2008, and the value of homes dropped dramatically. Fried, like many homeowners, had trouble making mortgage payments. Help came when Chase modified Fried’s mortgage under a HAMP, a federal aid program, by reducing the principal balance to $463,737. The rub was that Chase extended Fried’s mortgage insurance premiums an extra decade to 2026.


Whether it could do this depends on how we interpret the Homeowners Protection Act (“Protection Act”), 12 U.S.C. § 4901 et seq. Does it permit a servicer to rely on an updated property value, estimated by a broker, to recalculate the length of a homeowner’s mortgage insurance obligation following a modification or must the ending of that obligation remain tied to the initial purchase price of the home? We conclude the Protection Act requires the latter.

due process - impartial tribunal - actual bias v. unacceptable risk of bias - US SCt

Rippo v. Baker – US SCt – March 6, 2017


Criminal conviction reversed where defendant moved to disqualify judge, who was subject of federal investigation in with the state DA’s office had participated.

State supreme court’s use of actual bias standard was improper.  Under U.S. Supreme Court precedents “the Due Process Clause may sometimes demand recusal even when a judge “ ‘ha[s] no actual bias.’ ” Aetna Life Ins. Co. v. Lavoie, 475 U. S. 813, 825 (1986). Recusal is required when, objectively speaking, “the probability of actual bias on the part of the judge or decisionmaker is too high to be constitutionally tolerable.” Withrow v. Larkin, 421 U. S. 35, 47 (1975); see Williams v. Pennsylvania, 579 U. S. ___, ___ (2016) (slip op., at 6) (“The Court asks not whether a judge harbors an actual, subjective bias, but instead whether, as an objective matter, the average judge in his position is likely to be neutral, or whether there is an unconstitutional potential for bias” (internal quotation marks omitted)).


The decision in Bracy v. Gramley, 520 U. S. 899 (1997) is not to the contrary:   Although the Court explained that the petitioner there had pointed to facts suggesting actual, subjective bias, it did not hold that a litigant must show as a matter of course that a judge was “actually biased in [the litigant’s] case,” . . . . much less that he must do so when, as here, he does not allege a theory of “camouflaging bias.” The Nevada Supreme Court did not ask the question that the  SCt precedents require: whether, considering all the circumstances alleged, the risk of bias was too high to be constitutionally tolerable.

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