Green v. HSBC Mortgage Services, Inc. (In Re Green), 474 B.R. 790 (Bankr. D. Md. 2012) –
In Green, a lender refinanced a first priority deed of trust loan that had been made by IndyMac Bank, F.S.B. For some unknown reason the new deed of trust of the refinancing lender was not recorded. IndyMac Bank also had made a second priority deed of trust loan that was transferred to a third lender, HSBC Mortgage Services, Inc.
Chase Home Finance LLC, as servicer for the refinance loan, filed a complaint in state court seeking declaratory relief that it had a valid first priority lien based on an equitable mortgage or equitable subrogation. According to the court, equitable subrogation allows a lender that pays a debt to an existing lien holder and takes a new lien to step into the shoes of the original lien holder against intervening liens (including pre-existing subordinate liens).
The...
