A federal appeals court in Arkansas has issued a decision in a consolidated case involving the ability of national banking associations to utilize the non-judicial foreclosure process in the state.
JPMorgan Chase Bank, N.A., attempted to foreclose on five mortgages under the Arkansas Statutory Foreclosure Act. Repossessions conducted under the act can be completed without using the state’s court system.
Three of the borrowers had filed Chapter 13 bankruptcy, and a bankruptcy court found that because Chase was not registered with the Arkansas Secretary of State or with the Arkansas Bank Department as an out-of-state bank doing business in the state — it was not in compliance with the foreclosure act.
The other two cases were civil class actions.
All five cases were consolidated because of the same legal issue, and a U.S. District Court reversed the bankruptcy court’s decision, granted Chase’s motion for judgment in one of the other cases, and granted a motion to dismiss in the other case.
The borrowers appealed the district court’s decision with the U.S. Court of Appeals, Eighth Circuit.
“In these consolidated cases, we consider whether a national banking association chartered by the Office of the Comptroller of the Currency but not registered to do business with the Arkansas Secretary of State or the Arkansas Bank Department may use the non-judicial foreclosure procedure provided by the Arkansas Statutory Foreclosure Act. Ark. Code Ann. §§ 18-50-101-18-50-117,” an opinion released Tuesday stated.
On July 9, a decision from the federal appeals court indicated that such nationally chartered banks can utilize the non-judicial foreclosure system, and the District Court’s decision was affirmed.
“An entity may be authorized to do business in Arkansas for Statutory Foreclosure Act purposes pursuant to either state or federal law,” the judges wrote. “In JPMorgan’s case, federal law provides such authorization. The district court correctly concluded JPMorgan is authorized to do business in Arkansas and may avail itself of the benefit of the Statutory Foreclosure Act.”
