“Confirmed Judges, Confirmed Fears” is a blog series documenting the harmful impact of President Trump’s judges on Americans’ rights and liberties.
In November 2018, a divided three-judge panel of the Sixth Circuit ruled against the son of a deceased homeowner when the mortgage holder foreclosed on the house in what the son claimed was a plain violation of federal law. With Trump judge John K. Bush as the deciding vote, the majority ruled that there was no substantial federal question in the litigation, meaning the son could not go to federal court to assert his federal rights. The case is Estate of Robert Cornell, Jr. et al v. Bayview Loan Servicing.
Robert Cornell owned a house where he lived with his son, and he always made his monthly mortgage payments on time. Importantly, the mortgage agreement specifically stated that if ownership of the house changed, the lender had the right to make the entire loan due immediately or foreclose on the property. (This is called a “due-on-sale” provision.)
In the five months after Cornell died, no one made any mortgage payments. The executor of his estate reached out to lender Bayview Loan, asking what steps the family could take to keep the house. But the lender foreclosed on the property and resold it to someone else.
The family sued, claiming this violated a federal law called the Garn-St. Germain Act (“the Act”). Although the Act primarily blocks states from banning due-on-sale provisions, it has important exceptions. Under the Act, a due-on-sale provision cannot legally be exercised if the ownership change is because the owner died, or if the owner transfers the property to their spouse or children, both of which occurred here. The family also sued under several state laws in Michigan, including one that adopted the federal Act’s restrictions by reference. Bayview Loan claimed they foreclosed because the loan was in default, and the change in ownership had nothing to do with it. Although the case was filed in a state court, the lender had it removed to federal court on the basis of the family’s federal argument.
On appeal, with Bush making the majority, the panel ruled that federal courts cannot consider the Cornell family and estate’s case. First, the panel decided, the federal Act does not create a right for victims to go to court when it has been violated. And second, the Cornells’ state-law claims didn’t “implicate [any] significant federal issues.”
Dissenting Judge Karen Nelson Moore explained why a federal court has jurisdiction to accept the transfer from state court. She noted that “the claim at issue turns exclusively on federal law.” Congress passed the Act and overrode inconsistent state laws because inconsistency in the treatment of due-on-sale provisions was causing problems nationally. In addition, regardless of whether the federal law created a right for private lawsuits, part of the Michigan-law lawsuit “literally could not exist without federal law.”
Homeowners in the Sixth Circuit—Kentucky, Tennessee, Ohio, and Michigan—who lose their homes in direct violation of federal law will find the federal courthouse door closed to them.