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Community Banc Mortgage Corp. v. North Salem State Bank

United States District Court, Central District of Illinois, Springfield Division

May 21, 2015

COMMUNITY BANC MORTGAGE CORPORATION, an Illinois Corporation, Plaintiff,
v.
NORTH SALEM STATE BANK, an Indiana banking corporation, Defendant.

OPINION

SUE E. MYERSCOUGH UNITED STATES DISTRICT JUDGE

This cause is before the Court on the Defendant North Salem State Bank’s Motion to Dismiss (d/e 10). On May 15, 2015, at Defendant’s request, the Court heard oral argument on the Motion and took the matter under advisement. The Court now finds that the Complaint is not barred by the statute of limitations. The Motion to Dismiss is denied.

I. BACKGROUND

On January 16, 2015, Plaintiff Community Banc Mortgage Corporation filed a Complaint against Defendant North Salem State Bank in the Circuit Court for the Seventh Judicial Circuit, Sangamon County, Illinois. On February 19, 2015, Defendant filed a Notice of Removal. The Complaint contains the following allegations.

Plaintiff and Defendant were parties to a Secondary Mortgage Market Agreement dated May 21, 1992, as amended by Amendment to Secondary Mortgage Market Agreement dated effective November 1, 1996 (collectively referred to as the Agreement). Compl. ¶ 5. Pursuant to the Agreement, Defendant originated residential mortgage loans and then sold such loans to Plaintiff. Id. ¶ 6. Plaintiff thereafter sold the loans to the Federal National Mortgage Association (“Fannie Mae”), the Federal Home Loan Mortgage Corporation (“Freddie Mac”), and other secondary mortgage market participants. Id. ¶ 6.

Under the Agreement, Defendant, identified in the Agreement as “Third Party Lender, ” warranted that:

1. Mortgage loans are processed in compliance with all applicable Federal, State, and Local laws, and all FDIC, OCC, OTS, or Federal Reserve regulations applicable to real estate lending;
2. Mortgage loans are processed, packaged, and closed in accordance with Secondary Market guidelines;
3. Mortgage loans are originated, processed, and closed by the Third Party Lender, or their authorized representative. Third Party Lender is responsible for actions of authorized representatives as if Third Party Lender processed or closed the loan;
4. All documents and representations are true and correct; and
5. No builder, developer, property seller, or other interested party to a transaction has participated directly in the processing, packaging, or sale of any mortgage sold to UCB[1] [(Plaintiff)].

Compl. ¶ 7 (quoting Agreement ¶ E (d/e 1-1)). The Agreement also contained an indemnification provision:

Third Party Lender [(Defendant)] fully indemnifies and agrees to hold UCB [(Plaintiff)], its successors and assigns, harmless from and against any and all losses, claims, demands, actions, suits, damages, costs and expenses (including reasonable attorneys’ fees) of every nature and character that may arise or be made against or incurred by UCB as a result of Third Party Lender’s failure to perform its ...

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