[Johnson v. Federal Home Loan Mortgage Corporation____F3d____]
Facts: An owner refinances their mortgage secured by a trust deed on their property and establishes an impound account for the payment of homeowner’s insurance. The lender sells the mortgage to another mortgage holder but continues to service it. The lender fails to make timely homeowner’s insurance payments from the impound account and the policy is cancelled. The owner’s house burns down and the owner is denied coverage under their policy but is provided relief under the lender’s back-up insurance policy. The owner’s mortgage payments increase to cover the cost of the back-up insurance policy and the owner fails to make the increased payments, prompting the mortgage holder to foreclose.
Claim: The owner seeks to reverse the foreclosure, claiming the mortgage holder breached the terms of the trust deed and their fiduciary duty owed to the owner when they failed to pay the homeowner’s insurance since the mortgage holder is liable for the servicing agent’s conduct upon purchasing the mortgage.
Counterclaim: The mortgage holder claims they are not liable for the missed insurance payments since they did not assume the lender’s responsibilities as servicing agent and thus, it was the lender’s responsibility, not the mortgage holder’s, to timely pay the homeowners’ insurance.
Holding: A United States court of appeals holds the mortgage holder did not breach the terms of the trust deed since the mortgage holder’s purchase of the mortgage does not impose liability for the conduct of the servicing agent including the failure to make timely homeowner’s insurance payments from an impound account. [Johnson v. Federal Home Loan Mortgage Corporation____F3d____]