8th Circuit rules CitiMortgage complied with contract with Platinum Home Mortgage, reverses ruling

By Charmaine Little | Feb 15, 2019

ST. LOUIS – A federal appeals court has reversed a ruling in a breach of contract case between a purchaser of mortgage loans and a mortgage loan seller finding that the purchaser complied with the contract.

The U.S. Court of Appeals for the 8th Circuit reversed the ruling from the U.S. District for the Eastern District of Missouri in St. Louis in CitiMortgage Inc.’s case against Platinum Home Mortgage Corp. 

While the lower court granted Platinum summary judgment, ruling that CitiMortgage didn’t meet requirements when it didn’t show a time Platinum could fix the alleged defects, the 8th Circuit reversed.

“Because we conclude CitiMortgage adequately and substantially complied with the contract (which neither specified a form of notice nor indicated that the prescription of time for a cure had to be contained within the notice), we reverse,” Senior Judge Michael J. Melloy wrote in the Feb. 6 ruling.

Senior Judge Michael J. Melloy   Historical Society of the United States Courts in the 8th Circuit

"Critically, nothing in the original agreement states that the time “prescribed” for cure or correction had to be in writing, much less wholly communicated within one individual writing. In fact, the agreement does not indicate what form CitiMortgage’s notice of defect or prescription of time for cure or correction had to take," Melloy wrote. "...In short, the form of notice required by an agreement depends upon the agreement, and the clear and repeated notice provided in this case satisfied the vague requirements of the agreement."

CitiMortgage, which is a company that buys and resells mortgage loans, sued Platinum Home Mortgage Corp., who initiates and sells mortgage loans, for allegedly not complying with a contract when it didn’t repurchase seven defective loans following CitiMortgage’s demand of repurchase via issuing Platinum a notice for each loan.

Before their working relationship went awry, Platinum initiated mortgage loans and CitiMortgage purchased roughly 750 loans from Platinum, for a total of more than $140 million. This lawsuit concerns seven of the loans, valued at roughly $1 million, that CitiMortgage resold to Fannie Mae. 

Fannie Mae obligated CitiMortgage to repurchase the loans because Platinum allegedly failed to follow underwriting policies, the ruling states. Fannie Mae then told CitiMortgage there were issues with the mortgages, and CitiMortgage attempted to communicate with Platinum with three different letters for each loan (21 letters). CitiMortgage then filed the lawsuit two years after it sent the final letter for the seventh loan. 

Platinum filed a motion for summary judgment, alleging CitiMortgage wasn’t entitled to repurchase because their agreement had ended, and because CitiMortgage had already foreclosed on the loans and that CitiMortgage didn’t offer time for a cure or correction. The lower court only ruled on the final issue and said CitiMortgage failed to give proper notice.

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