The following decision affects all mortgage foreclosure proceedings in the state of Delaware
whether proceeding on the mortgage, the note or both. Plaintiff’s counsel must now include a
statement in the pleading confirming that the Plaintiff is the current holder of the note at the
time the complaint is filed. This requires the Plaintiff to provide counsel with a copy of the
note and/or any allonge so that Plaintiff’s counsel can confirm the note is either endorsed to
the Plaintiff or endorsed enblank and that the Plaintiff is the holder of the note with the right
The District of Columbia Court of Appeals, in an en banc decision, ended the application of
the Frye test for determination of the admissibility of expert testimony and adopted the
standards of Rule 702 of the Federal Rules of Evidence. In Motorola Inc. v. Murray, Case No.
14-CV- 1350, 2016 WL 6134870 (D.C. 2016), entered on October 20, 2016, the Court concluded
that Rule 702 was preferable, due to its focus on the reliability of principles and methods and
whether they have been reliably applied
The Frye “general acceptance” test has been superseded by Rule 702 in the Federal courts
and many other jurisdictions, beginning with the 1993 Supreme Court Case of Daubert v.
Merrell Dow Pharmaceuticals, Inc. Daubert’s list of specific factors to be considered in
evaluating expert testimony applies to testimony based on scientific knowledge as well as
technical or other specialized knowledge.
Under Rule 702, as applied in Daubert, a witness may be qualified as an expert if (1) the
testimony will help the trier of fact to understand the evidence or determine a fact in issue, (2)
the testimony is based on sufficient facts or data, (3) the testimony is the product of reliable
principles and methods, and (4) the expert has reliably applied the principles and methods to
Rule 702 will be applied to the trial of any civil or criminal case in the District of Columbia
courts that proceeds to trial after the date of the opinion, October 20, 2016.
New Jersey Supreme Court Holds That First Mortgagee May Lose Priority On Optional Future Advances Made After Notice of an Intervening Lien
The New Jersey Supreme Court has held that optional advances under a loan
agreement are subordinate to a junior lienholder when made after the lender receives
actual notice of the intervening lien. The case, Rosenthal & Rosenthal v. Benun, et. al.,
pitted Rosenthal & Rosenthal, Inc., a factoring company and holder of two senior
mortgages which allowed optional future advances against Riker, Danzig, Scherer,
Hyland & Perretti, L.L.P., a law firm which took a subordinate mortgage to secure the
payment of its legal fees.
Rosenthal & Rosenthal, Inc. (The First Mortgagee) held two mortgages on certain real
property in New Jersey. The mortgages secured loans made to a group of businesses
known as the Jazz Entities. The loans secured by the mortgages provided that
Rosenthal had the option to make future advances to the Jazz Entities up to a maximum
principal of one million dollars. Later, the Jazz Entities became indebted to the law firm
of Riker, Danzig, Scherer, Hyland & Perretti, L.L.P. (Riker) in the amount of $1.67
million in unpaid legal fees. In exchange for the firm’s agreement to continue to provide
legal services, the Jazz Entities gave a mortgage to Riker on the property secured by
the Rosenthal mortgages. Riker continued to perform legal services, and its unpaid fees
eventually grew to $3 million. Then, in connection with a contemplated new loan,
Rosenthal became aware of Riker’s mortgage and sent an e-mail to the firm stating that
Riker’s mortgage would need to be subordinated to any new mortgage made by
Part 2: Why Do You Need A Last Will?
Why you should have a Will. We wrote recently about why one should not write their
own will. Of course, that begets the question, why does one need a will in the first
place? Let me illustrate. I recently was told by a married couple, with 2 children, that
they didn’t think they needed a will. They thought when one of them died all of their
property would go to the surviving spouse. After they were both deceased, they
continued, then everything would go to their kids. This seems like a logical position,
right? Wrong! I had to break the bad news to them. Without a will, the surviving spouse
might inherit only part of the deceased spouse’s estate. Part of the remaining estate
would go to their children, even though the surviving spouse was … still alive. Anyhow,
crisis averted. They promptly had me prepare new wills. On a larger scale, the musical
artist (formerly known as) Prince died last year, with an estate estimated in the $300
million dollar range. Published reports indicate that he died without a will. Chaos ensued
(and continues to this day). Numerous relatives or persons claiming to be relatives filed
papers with a Minnesota probate court claiming to be rightful heirs. He also appointed
no-one to handle his affairs upon his death, requiring a count appointed administrator
for his estate. It could take years for the court to determine who the legitimate heirs to
his estate are. Without a will, history and experience have shown that disputes often
result among potential heirs, and in many cases require expensive litigation to resolve.
Give you and your heirs peace of mind, put a proper estate plan in place today.
As of January 1, 2017, the border between North Carolina and South Carolina has been
redrawn with modern technology to confirm the boundary lines established over 200
years ago. The boundary has not changed, but over time some of the markers from the
original survey have been destroyed or lost. The new state line has caused some
properties that were originally in North Carolina, to now be in South Carolina and vice
versa. This change not only affects the personal lives of the residents, but also has
some very important implications and changes for mortgage lenders and servicers.
Below are the applicable excerpts of the new laws from each state as it relates to
mortgages and deeds of trust.
As of December 23, 2016, the laws created and amended by Bill S8159 took effect.
These changes affect everything from pre-foreclosure notices, settlement conferences
and the handling of vacant properties within the State of New York. This article
highlights some of the key changes that are now in effect.
The Federal Housing Finance Agency’s Home Affordable Modification Program (HAMP)
has been a loss mitigation option available to defaulted Borrowers since 2009. Initially
scheduled to sunset in December of 2013, HAMP was extended until December 31,
2016. Fannie Mae and Freddie Mac consolidated three modification programs,
Standard Modification, Streamlined Modification and HAMP, into the Fannie Mae
Flex Modification program.
Servicers may begin to submit cases for Flex Modification consideration to Fannie Mae
and Freddie Mac as early as March 1, 2017 with mandatory implementation effective
October 1, 2017. In the interim, cases can still be considered for both Standard and
Streamlined Modifications. There will be a two-month gap between HAMP’s official
sunset and the availability of a similar loss mitigation option.
Last year, the Pennsylvania Housing Finance Agency (“PHFA”) promulgated a new
Notice of Intention to Foreclose (“New NOI”) that complies with the two (2) Pennsylvania
statutes applicable to such notice: Act 91 (35 P.S. §1680.401 et seq.) and Act 6 (41
P.S. §401 et seq.). The New NOI, published in the April 30, 2016 Pennsylvania Bulletin
(Vol. 46, No. 18), took effect on September 1, 2016 and can be found at
The New NOI is a shorter and simpler document than the previous NOI. The first page
of the New NOI describes the procedures of the Homeowner’s Emergency Mortgage
Assistance Program (“HEMAP”) as well as borrower’s/homeowner’s rights under Act 6.
The New NOI includes an “Account Summary” section, which contains a series of tables
in which the mortgagee is to display information relating to the mortgage account, the
nature of the default, as well as borrower/homeowner and mortgagee information.
Notably, in the section titled “How to Contact Your Lender,” the required fields now
indicate that the sender must list the lender or servicer, but does not require the sender
to list the original mortgagee. The New NOI introduces an additional option for
responding to the question of whether the mortgage is assumable, allowing the
mortgagee to state “[n]o, but please contact your Lender to discuss your options,” in the
event that assumption is not permitted under the terms of the mortgage, but the
mortgagee wants to make the option available. Mortgagees/servicers may not use any
variation of the form. Font type, font size, and contents thereof must be observed.
Part 1: Why Not To Prepare Your Own Will
Fernande Aube had a sense of humor. The French Canadian woman died of cancer in 2007,
leaving an unsigned handwritten Last Will … on a Sudoku puzzle. Apparently her children, 1
son and 2 daughters, didn’t appreciate her sense of humor. What happened next? Litigation
ensued. Her son claimed that a prior Will, prepared by an attorney and properly signed and
notarized (and that, of course, favored him) was the legitimate Will. Her daughters, favored in
their mother’s “Last Will and Sudoku Puzzle”, argued that the unsigned handwritten Will was
the legitimate Will. While a lower court ruled in favor of the daughters, an appeals court
overruled the lower court, ruling in favor of the son that the prior Will was valid. Published
reports indicated that Ms. Aube was worth approximately $100,000 at her death. No doubt,
much of that wealth was depleted by the feuding siblings. Stories like this are not
uncommon. This author currently represents a decedent’s estate where the decedent
prepared his own Will. The Will was, simply, a mess. The estate incurred thousands of dollars
in legal fees just to seek to have the Will ruled valid by a court, fees that could have been
avoided if the decedent took the time to have a Will professionally prepared. Yes, it can be
stressful to face and plan for one’s own mortality, but a professionally prepared Will can
reduce the chance of mistakes that could result in expensive and time consuming litigation to
Mortgage foreclosure proceedings in the state of Delaware have mainly been in the
jurisdiction of the Superior Court. However for many years, case law has required that a
mortgage which is not under seal be foreclosed upon through the court of equity, the
Chancery Court. Monroe Park v. Metropolitan Life Ins. Co., 457 A.2d 734, 736 (Del.
1983). In the Monroe Park case, the court specifically stated that “….unless the seal
requirement is abolished by statute, a mortgage must be under seal to be enforceable
by law.” Earlier this year, the necessary abolishment finally occurred.
House Bill 353 was signed by the Governor on June 28, 2016. This bill abolished the
requirement that a foreclosure action on a mortgage which is not under seal must be
heard in the Court of Chancery. The new statute, codified at 25 Del.C. § 2101(b), is
beneficial to borrowers and lenders alike. Bringing all mortgage foreclosure proceedings
within the jurisdiction of one court provides more continuity of decision making, as the
judges of the Superior Court see significantly more foreclosure actions that those in the
Chancery Court. Additionally, HB 353 provides a more expeditious process, as the
Superior Court allows for the entry of default judgment in those situations where the
borrower does not appear or respond. An action in Chancery requires a motion, notice
and a hearing which typically added 2-3 months to the foreclosure process despite the
fact that the matter was uncontested. Finally, the Superior Court and the Department of
Justice administer a mediation program which became mandatory in 2012. (See 10
Del.C. §5061, et. al.) For those cases which used to be heard in the Court of Chancery,
borrowers were not afforded this opportunity to mediate with the lender. As a result of
the statutory change, all borrowers now have equal access to this program.
While there is often comfort in long standing traditions and well-established laws,
sometimes, change is good.
S&E Attorneys &
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