Malcolm Futhey III has deficiency lawsuit based on second mortgage dismissed

Posted by: Malcolm Futhey III at  Friday, January 18, 2019

On November 9, 2018, Malcolm B. Futhey III successfully moved to dismiss a deficiency action based on a second mortgage for failure to satisfy the two-year statute of limitations. In December 2012, the first mortgagee, Wells Fargo, foreclosed on the home of the defendant, Futhey’s client. Bank of America held a second mortgage and alleged defendant still owed about $50,000. In July 2017, Bank of America filed a suit for the deficiency on the second mortgage. However, in 2010, the Tennessee General Assembly had reduced the statute of limitations for deficiencies after a foreclosure to two (2) years. Tenn. Code Ann. § 35-5-118(d)(1). Futhey argued on behalf of defendant that the two-year statute of limitations applied to all deficiencies, including deficiencies allegedly owed on second mortgagees. Bank of America argued conversely that the two-year statute of limitations applied only to first mortgages and that Bank of America had a six-year statute of limitations based on its breach-of-contract claim related to the promissory note. The Court agreed that the two-year statute of limitations for deficiencies applied to second mortgages and dismissed Bank of America’s lawsuit against Futhey’s client with prejudice. 

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