Badrawi v. Wells Fargo Home Mortg., Inc., 2013 WL 3242078 (8th Cir. 2013).
Last month, the Eighth Circuit Court of Appeals ruled that a Mortgagee’s failure to record a Notice of Pendency of foreclosure proceedings before the first date of publication in a foreclosure by advertisement does not provide the homeowner a basis to void the foreclosure.
Wells Fargo Bank, N.A. (“Wells”), commenced a foreclosure by advertisement to foreclose its mortgage secured by the Rogers, Minnesota home of Mary Jane Badrawi. On April 19, 2011, Wells recorded the Notice of Pendency and began publication of the notice of foreclosure that same day. Following a post-foreclosure lawsuit, Minnesota’s Federal District Court concluded that recording the Notice on the same day publication began is not improper under the Minnesota Statutes. The Eight Circuit Affirmed this view.
The Eighth Circuit’s conclusion, however, reaches a result different from that of the Minnesota Court of Appeals, which concluded, in an unpublished decision, that recording the Notice of Pendency on the same day that the Mortgagee begins publication is not in strict compliance with Minn. Stat. § 580.032, subd. 3, which requires that the Notice be recorded “prior to the first date of publication.” Ruiz v. 1st Fidelity Loan Servicing, LLC, A11–1081, 2012 WL 762313 (Minn. Ct. App. Mar. 12, 2012) (Larkin, J.). In Ruiz, The Minnesota Court of Appeals reversed and remanded a district court’s ruling that publication could properly begin on the same day that the Notice was recorded. But the Eighth Circuit resolved the same-day recording issue under the 1882 case of Holmes v. Crummett, 13 N.W.924 (Minn. 1882), which interpreted Minnesota foreclosure law to conclude that a foreclosure may not be set aside due to the occurrence of an act that had no effect on the homeowner.
The Eighth Circuit went on to conclude that, because the homeowner must be personally served with notice of the foreclosure proceedings under Minn. Stat. § 580.03, the recorded Notice of Pendency is redundant to the service of the Notice on the borrower. On this basis, the Court concluded that Notice of Pendency requirement is not for the benefit of the homeowner who has otherwise been served with notice, and does not provide a basis for a procedural challenge to a foreclosure by the homeowner.
The Eighth Circuit dismissed Ruiz as non-controlling and unpersuasive, providing a common-sense framework for lenders to defeat this type of foreclosure challenge. Unless and until the Minnesota Supreme Court considers this issue, the Badrawi Court’s opinion will help to curtail the same-day recording claims of homeowner’s seeking to succeed under Ruiz.
For more information or assistance, contact Wyatt Partridge in Foley & Mansfield’s Minneapolis office by eE-mail at email@example.com.