BankBryanCave.com

Bank Bryan Cave

Foreclosures

Main Content

Georgia Supreme Court Weighs in On Guarantor Liability for Deficiencies

May 9, 2017

Authors

Mica Germain and Jay Latzak

Georgia Supreme Court Weighs in On Guarantor Liability for Deficiencies

May 9, 2017

by: Mica Germain and Jay Latzak

On April 17, 2017, the Supreme Court of Georgia made yet another critical decision in a line of cases which together, create the framework for a guarantor’s liability for a deficiency after a foreclosure has been conducted. The case styled York et al. v. Res-GA LJY, LLC came before the Supreme Court in consideration of the questions of (i) the extent and limitations of guarantor waiver of rights under O.C.G.A. §44-14-161; and (ii)  whether a creditor may pursue a guarantor for a deficiency after judicial denial of confirmation of a foreclosure sale.

In York et al., the lender sought to confirm the foreclosure sale of real property located in three different counties in Georgia, which properties were used to secure five promissory notes evidencing loans made to several entities and guaranteed by individual guarantors affiliated with such entities. The court in each

Read More

Can a Guarantor Waive his Right to a Foreclosure Confirmation Proceeding in Georgia?

February 23, 2016

Authors

Curtis Romig, Jerry Blanchard and Leah Fiorenza McNeill

Can a Guarantor Waive his Right to a Foreclosure Confirmation Proceeding in Georgia?

February 23, 2016

by: Curtis Romig, Jerry Blanchard and Leah Fiorenza McNeill

Yes.

On Monday, February 22, 2016, in a case closely watched by commercial real estate lenders, borrowers and guarantors, the Supreme Court of Georgia issued its opinion in PNC Bank, N.A.  v. Smith, et al., S15Q1445.  The case was before the Supreme Court on two certified questions from the United States District Court for the Northern District of Georgia.  The two Certified Questions were: (1) Is a lender’s compliance with the requirements contained in OCGA § 44-14-161 a condition precedent to the lender’s ability to pursue a borrower and/or guarantor for a deficiency after a foreclosure has been conducted?; and (2) If so, can borrowers or guarantors waive the condition precedent requirements of such statute by virtue of waiver clauses in the loan documents?

In answering the first question in the affirmative, the Georgia Supreme Court upheld its reasoning in First Nat. Bank & Trust Co. v. Kunes, 230 Ga. 888,

Read More

Oral Arguments on HWA Decision

September 16, 2015

Authors

Bryan Cave

Oral Arguments on HWA Decision

September 16, 2015

by: Bryan Cave

On Monday, September 14, 2015, the Georgia Supreme Court heard oral arguments in the case of PNC Bank, National Assoc. vs. Kenneth D. Smith, et al., Case No. S15Q1445.

As noted in our prior blog post, this case is of great interest to banks operating in Georgia which are involved in real estate lending.  At issue is whether a lender may conduct a non-judicial foreclosure on real estate serving as collateral, and then pursue a guarantor without first pursuing a confirmation of the sale.  In addition, the Court is being asked to consider whether a guarantor may waive such a requirement.  In an earlier case, HWA Properties, Inc. v. Cmty. & S. Bank, 322 Ga. App. 877 (2013), the Court of Appeals held that a confirmation following a foreclosure sale is no longer a prerequisite to suing the guarantor for a deficiency when the guaranty waives such a confirmation. 

Read More

Bryan Cave Files Amicus Brief On Behalf Of Georgia Bankers Association Regarding Recent HWA Decision

September 11, 2015

Authors

Bryan Cave

Bryan Cave Files Amicus Brief On Behalf Of Georgia Bankers Association Regarding Recent HWA Decision

September 11, 2015

by: Bryan Cave

Today, Bryan Cave filed an amicus curiae brief on behalf of the Georgia Bankers Association in a case currently pending before the Georgia Supreme Court styled PNC Bank, National Assoc. vs. Kenneth D. Smith, et al., Case No. S15Q1445.  The case is of great interest to banks operating in Georgia because the Supreme Court will be reviewing the reasoning of the HWA Properties, Inc. v. Cmty. & S. Bank, 322 Ga. App. 877 (2013) decision, in which the Georgia Court of Appeals held that a lender was entitled to pursue a guarantor for any deficiency remaining on a debt after a foreclosure, regardless of whether the lender had confirmed the foreclosure sale, if the guaranty included language waiving all defenses to collection of the debt.  As articulated in the amicus brief filed by Bryan Cave on behalf of the Georgia Bankers Association, a ruling by the Georgia Supreme Court

Read More

CFPB Finalizes Amendments To New Mortgage Servicing Rules

September 30, 2013

Authors

Amy Thompson

CFPB Finalizes Amendments To New Mortgage Servicing Rules

September 30, 2013

by: Amy Thompson

On September 13, 2013, the Consumer Financial Protection Bureau (“CFPB”) issued final amendments and clarifications to its mortgage servicing regulations, which go into affect January 10, 2014.  These rules were initially issued in January 2013 and have been amended based on comments received during the implementation period.  The rules relating to loss mitigation procedures are set out in Regulation X of the Real Estate Settlement Procedures Act.  (12 CFR § 1024.41.)  Among the important loss mitigation rules that go into effect on January 10, 2014:

I.    Rules Affecting Foreclosures.

  • Servicers may no longer begin a foreclosure until the borrower is more than 120 days delinquent.  In some states it is not uncommon for foreclosures to begin when borrowers are delinquent by as a little as 60 days.  It is therefore important that servicers take note of this new restriction.  Servicers must delay first legal action until the borrower
    Read More

Georgia Court Holds Foreclosure Confirmation Statute Inapplicable to Certain Guarantors

September 19, 2013

Authors

Curtis Romig

Georgia Court Holds Foreclosure Confirmation Statute Inapplicable to Certain Guarantors

September 19, 2013

by: Curtis Romig

In a landmark decision, the Georgia Court of Appeals recently ruled that a guarantor may waive the right to require the holder of a secured debt to confirm a forceclosure sale prior to seeking a deficiency judgment.  In HWA Properties, Inc. v. C&S Bank, 2013 WL 3498088 (Ga. App. July 15, 2013), the Court of Appeals was asked to consider whether a guarantor could be liable for a loan deficiency where there had not been a valid confirmation pursuant to O.C.G.A. § 44-14-161 and the borrower had been discharged.  The Court of Appeals held that a confirmation following a foreclosure sale is no longer a prerequisite to suing the guarantor for a deficiency when the guaranty waives such a confirmation.

The Georgia confirmation statute, which has been on the books in Georgia since the Great Depression, requires a secured creditor to show that it bid the fair market value of

Read More

11th Circuit Clarifies the TILA Servicer “Administrative Convenience” Exception

May 24, 2013

Authors

Bryan Cave

11th Circuit Clarifies the TILA Servicer “Administrative Convenience” Exception

May 24, 2013

by: Bryan Cave

On May 23, 2013, the Eleventh Circuit upheld an Alabama federal court’s dismissal of a proposed class action brought by a mortgage holder who claimed the servicer violated the Truth in Lending Act (“TILA”) by failing to notify her of a transfer in ownership of her mortgage loan, as required by Section 1641(g).  In an unpublished per curium opinion, a three-judge panel in Giles v. Wells Fargo Bank, N.A. (No. 12-15567)  agreed with the lower court that, under TILA’s “administrative convenience” exception,  the servicer, who was assigned an ownership interest in the mortgage loan prior to foreclosing on the loan, was not obligated to provide notice of the assignment.

Section 1641(g) of TILA provides that a creditor who is the new owner or assignee of an existing mortgage loan must provide written notice to the borrower within thirty days of the date on which the new creditor acquired the

Read More

Georgia Supreme Court Addresses Non-Judicial Foreclosures

May 20, 2013

Authors

Jennifer Dempsey

Georgia Supreme Court Addresses Non-Judicial Foreclosures

May 20, 2013

by: Jennifer Dempsey

On May 20, 2013, the Georgia Supreme Court issued a unanimous opinion in the You v. JP Morgan Chase case (Case No. S13Q0040).  The You Opinion addresses several questions that the United States District Court for the Northern District of Georgia had certified to the Supreme Court regarding the operation of Georgia’s law governing non-judicial foreclosures.

First, the Supreme Court addressed the question: “Can the holder of a security deed be considered a secured creditor, such that the deed holder can initiate foreclosure proceedings on residential property even if it does not also hold the note or otherwise have any beneficial interest in the debt obligation underlying the deed?” The Supreme Court answered “Yes” to this first question.

Second, the Supreme Court addressed the question “Does O.C.G.A. § 44-14-162.2 (a) require that the secured creditor be identified in the notice described by the statute?”  The Supreme Court answered “No”

Read More

Georgia Appellate Court Decisions Back Secured Lenders

April 18, 2013

Authors

Bryan Cave

Georgia Appellate Court Decisions Back Secured Lenders

April 18, 2013

by: Bryan Cave

Two recent Georgia Court of Appeals en banc decisions issued on March 29 have weighed in on one aspect of the MERS fallout, holding in favor of the secured lender.

In Montgomery v. Bank of America et al., No. A12A0514, 2013 WL 1277830 (Ga. App. March 29, 2013) and LaRosa v. Bank of America, N.A., et al., No. A12A2393, 2013 WL 1286692 (Ga. App. March 29, 2013), the Court of Appeals was asked whether a security deed which includes a non-judicial power of sale is transferable without evidence of the transfer of the underlying debt instrument. Montgomery at *2; LaRosa at *1.  Without discussing the myriad legal issues on both sides of this debate, the Court of Appeals upheld the trial court’s ruling in favor of the mortgagee, citing the lack of statutory authority or case law supporting the mortgagor’s theory that the note and deed must “travel together” for

Read More

Rescission of Foreclosure Sales in Georgia

April 9, 2012

Authors

Jerry Blanchard

Rescission of Foreclosure Sales in Georgia

April 9, 2012

by: Jerry Blanchard

Georgia foreclosure law has been given a lot of attention over the last several years, both by the courts as well as the legislature. The Georgia Supreme Court has had to resolve the issue of whether a lender must sue on a note prior to foreclosing under a security deed and held that the choice is up to the lender. (See REL Development, Inc. v. BB&T, 699 SE2d 779 (2010).)  Likewise, the legislature addressed a perceived problem in large loan servicing companies foreclosing on real property even though a division of the servicer was still negotiating with the borrower to cure the default.  Thus, a lender can rescind a foreclosure, for among other reasons, the fact that it had entered into an agreement when the default was cured prior to the sale or the borrower had entered into an agreement to cure the default. (See OCGA 9-13-172.1.)  What happens though

Read More
The attorneys of Bryan Cave LLP make this site available to you only for the educational purposes of imparting general information and a general understanding of the law. This site does not offer specific legal advice. Your use of this site does not create an attorney-client relationship between you and Bryan Cave LLP or any of its attorneys. Do not use this site as a substitute for specific legal advice from a licensed attorney. Much of the information on this site is based upon preliminary discussions in the absence of definitive advice or policy statements and therefore may change as soon as more definitive advice is available. Please review our full disclaimer.