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Home Foreclosures: 11.5.2 Limited Right to Cure Under Federal Law

Whether a manufactured home is considered realty or personalty, a right to cure the default which supplements or goes beyond state law is potentially available due to regulations of the federal Office of Thrift Supervision.281 Under these regulations, certain manufactured home creditors who want to take advantage of federal preemption of state interest rate ceilings must afford the consumer a right to cure.

Home Foreclosures: 11.6.1 Damages Claims

Truth in Lending claims may be available as defenses or counterclaims in manufactured home foreclosure cases. The federal Truth in Lending Act (TILA) requires disclosures in any consumer credit transaction.289

Home Foreclosures: 11.6.2 Rescission

While Truth in Lending damages are an attractive counterclaim that can reduce the alleged delinquency on a manufactured home, the statute also offers a right to rescind that can be an even more powerful tool to prevent foreclosure. Unfortunately, however, the right to rescind applies to only a small subset of credit transactions secured by manufactured homes.

Home Foreclosures: 11.7 RESPA Defenses in Manufactured Home Foreclosures

The federal Real Estate Settlement Procedures Act (RESPA) can also provide defenses and counterclaims in manufactured home foreclosures. RESPA applies to all loans secured by a first or subordinate lien on residential real property designed principally for the occupancy of one to four families.306 Unlike the TILA rescission right, RESPA applies to purchase-money credit.

Home Foreclosures: 11.8 Defenses Based on State Credit Statutes

Claims and defenses under state credit statutes should also be investigated. Most manufactured home sales are financed and will thus be covered by a state credit statute. If the transaction is set up as an installment sale, with the contract assigned to a financing institution, often there is a retail installment sales act (RISA) or motor vehicle retail installment sales act (MVRISA) that applies.332 If the transaction is set up as a loan, a different statute will apply.

Home Foreclosures: 11.10 Homestead Exemption

Sometimes foreclosure upon a manufactured home is threatened because of a judgment lien rather than a consensual security interest. Whether the debtor can protect the home from judgment execution depends on the language and interpretation of the state homestead exemption statute. In a bankruptcy case, a judicial lien may be avoided to the extent that it impairs the consumer’s claim of exemption under a homestead or other exemption statute.340

Home Foreclosures: 11.11 Workout Agreements

Workout agreements on manufactured home loans have been increasingly possible.351 Loans on manufactured homes were eligible for modification under the Home Affordable Modification Program (HAMP), but that program closed to new applicants in December 2016.352 On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was enacted and provided relief for a subset of homeowners facing hardship due to the coronavirus pandemic.

Home Foreclosures: 11.14 Problems Relating to Manufactured Home Parks

Space in manufactured home parks is often at a premium. A home may lose much of its value if it is sold without an assurance that it can stay on the rented lot in the park. Even if a new buyer has a place to locate the home, moving a manufactured home is costly, runs the risk of damage, and accelerates the home’s deterioration even if there are no mishaps in the process of removing, hauling, and re-siting it.

Home Foreclosures: 11.15 Effect of Default on Debt or Rent for Land on Which Manufactured Home Is Sited

Additional issues may arise as to the land on which the manufactured home rests. If the land is owned by the homeowner, the land may be subject to a mortgage or other liens. The mortgage or lien holder may or may not be the same entity that holds the security interest in the home. In either case, the debt for the land needs to be addressed at the same time as a plan is developed to address the debt on the home.

Automobile Fraud: 9.2.1 Advantages and Disadvantages in Automobile Fraud Cases

A breach of warranty is present in every case in which the odometer reading, vehicle identification number (VIN), make, model, year, or other vehicle characteristic is not as represented on the vehicle documentation. A breach of warranty will also exist in virtually every other case in which the vehicle history is not as represented or when important information about the car is not disclosed. It is thus critical for practitioners to understand the advantages and disadvantages of warranty claims in automobile fraud cases.

Automobile Fraud: 9.2.2.1 Nature of Warranty of Title

The UCC provides that implicit in every sale is a warranty of title. Specifically, under UCC § 2-312(1), in every contract for sale there is a warranty by the seller that the title conveyed is good and its transfer rightful. This warranty also assures that the goods will be delivered free from any security interest or other lien or encumbrance, unless the buyer has knowledge of the encumbrance at the time of contracting.

Automobile Fraud: 9.2.2.3 Disclaimer of Warranty of Title

The usual provisions for disclaimer of implied warranties do not apply to the warranty of title.43 Warranty of title can be modified only by specific language or circumstances which give the buyer reason to know of the title defect.44 Neither an “as is” disclaimer nor a statement that the seller is selling only its interest in the vehicle is sufficient.45 To defeat the warranty, the buyer must have actual knowledge of the title defect, not me

Automobile Fraud: 9.2.2.4.1 UCC remedies

As with other warranty claims, the buyer must give timely notice to the seller as a precondition of asserting a claim for breach of warranty of title.48 Particularly when the seller is not acting in good faith, this requirement of a timely notice of breach should be liberally construed in favor of the buyer.49 One court held that notice given by filing suit eight months after police seized the vehicle was sufficient.50 However in other contex

Automobile Fraud: 9.2.2.4.2 Application of Magnuson-Moss Act

The warranty of title is not an express warranty, because the warranty is not dependent on the seller’s representations. It is implicit in the sale. Nevertheless, whether a warranty of title is an implied warranty or some other type of warranty is unclear.

Automobile Fraud: 9.2.2.4.3 Potential defendants; bond claims

Warranty of title problems often arise because a dealer sells the car to a consumer without paying the former owner of the car or without paying a floor plan financer who has a security interest in the vehicle. The dealer then is unable to deliver good title to the new buyer. Dealers who stoop to such fraud are usually on their way out of business, and the consumer should assert a claim against the dealer’s bond as soon as state law allows.63

Automobile Fraud: 9.2.2.5 Obtaining Clear Title for the Buyer

Sometimes the title problem arises because the dealer sells the car without paying the previous owner, and then the previous owner refuses to release the title. In this situation the buyer should be able to win title to the car, as long as the previous owner traded the vehicle in to the dealer, sold it to the dealer, or placed it on the dealer’s lot for sale.

Automobile Fraud: 9.2.2.6 Practical Tips in Warranty of Title Cases

Discovery of a title defect can often be an opportunity for the consumer to get out of the purchase of a bad car. A dealer that fails to pay off the floor plan financer or the previous owner is probably also cutting corners in other ways and selling vehicles with serious concealed problems. The consumer should consider revoking acceptance of the vehicle.

Automobile Fraud: 9.2.3.1 Creation and Breach of Express Warranties

Whenever a seller makes an affirmation of fact or promise which relates to goods and plays any role in the overall bargain of the parties, an express warranty is created that the goods shall conform to every aspect of that statement.74 A statement can be binding even if it is general and imprecise, nonverbal, made to the public at large, made after the deal is struck, or originating from a third party.75 An express warranty is also created by any description of the goods or any sample or mod

Automobile Fraud: 9.2.3.2.2 Express warranties by description

Other express warranties in used car sales are created by the title, purchase order, and other documents, which will specify the car’s vehicle identification number (VIN), make, model, and year. These create express warranties that the car is that VIN, make, model, and year.92 If substantial parts of a rebuilt vehicle in fact are parts from different makes, models, or years, then the warranty is breached.93 The same is true if the VIN is fictitious.