Vincent Howard and our Riverside foreclosure defense attorneys were interested to see a foreclosure lawsuit that brushed off strict compliance with foreclosure laws. In Badrawi v. Wells Fargo Home Mortgage, Mary Jane Badrawi argued that her home's foreclosure was invalid because Wells Fargo failed to strictly comply with Minnesota law on foreclosure procedures. Minnesota requires foreclosing entities to record a notice of foreclosure before publishing it, but in Badrawi's case, the notice was recorded on the same day as publication. The district court agreed to dismiss it because Badrawi was not prejudiced; there is no dispute that she received personal notice. The Eighth U.S. Circuit Court of Appeals ultimately agreed, but a dissent by Judge Smith argued that the Minnesota appeals courts have ruled for strict compliance.
Badrawi bought her house in 2003, eventually fell behind on payments, and--like many others who got into trouble during the housing downturn--was not successful in getting a loan modification from Wells Fargo. Wells Fargo chose a Minnesota foreclosure by advertisement, which requires that it publish a foreclosure notice in a newspaper, then record a notice with the county real estate records office. These things were both done on April 19. Two days later, a representative from Wells Fargo served personal notice on Badrawi's daughter. Six months after the foreclosure sale, Badrawi filed this lawsuit, seeking to invalidate the foreclosure because state law requires the filing with the county before the first date of publication in a newspaper. Wells Fargo removed the case to federal court and successfully moved to dismiss for failure to state a claim.
Badrawi appealed to the Eighth Circuit, which upheld the decision in a divided ruling. The district court noted that the Minnesota Supreme Court had rejected an 1882 attempt to invalidate a foreclosure based on an action that could not have affected the plaintiff. In so ruling, the district court did not follow a 2012 Minnesota Court of Appeals case that granted relief to the homeowner in a similar situation. The Eighth Circuit majority agreed that the 2012 case is not binding on federal courts, though the dissent disagreed because state appeals courts rulings can guide federal courts' interpretations of state law. Under the 1882 case, the Eighth said, Badrawi is not entitled to relief because the noncompliance could not have affected her; she got personal notice of the foreclosure. Nor was the violated statute enacted for her benefit, the court said; it is "most sensibly read" to protect third parties with an interest in the property.
Vincent Howard and our Santa Ana foreclosure defense lawyers would have preferred an outcome that protects the homeowner's rights better. The Eighth rejected the 2012 case, which was on point, in favor of a ruling that was more than 130 years old and not directly on point. We believe the recent case would be more helpful in guiding the Eighth about what the Minnesota Supreme Court would do if asked to decide this case tomorrow. In fact, the Minnesota Supreme Court ruled on an unrelated issue in the 2012 case and specifically said foreclosing parties must strictly comply with the statute. And while Badrawi may have gotten adequate notice of the foreclosure, Vincent Howard and our Rancho Cucamonga foreclosure defense attorneys are sure that her rights are affected by the court's permissive interpretation of the foreclosure statute.
If you're considering legal action to stop an unfair foreclosure or hold a bank legally liable for its negligence with loan modifications, you should call Howard Law, P.C. today. You can reach us through our website or call 1-800-872-5925.