In the recently decided case of The Bank of New York Mellon Trust Company, N.A. v. Morgan Stanley Mortgage Capital, Inc. (2d Cir. April 27, 2016), a
The United States Court of Appeals for the Second Circuit recently ruled that a midstream electronic fund transfer (“EFT”) temporarily in the possession of an intermediary bank in New York may not be garnished under the Federal Debt Collection Procedures Act (“FDCPA”), 28 U.S.C. 3206, et seq., to satisfy judgment debts owed by either the originator or the intended beneficiary of the EFT.
The recent decision of the US Court of Appeals for the Second Circuit in Trust for the Certificate Holders of the Merrill Lynch Mortgage Investors, Inc Mortgage Pass-Through Certificates v Love Funding Corp(1) presented unanswered questions with respect to the application of champerty to an assignment of claims in connection with transfers of debt instruments.
A recent Second Circuit decision could have significant ramifications for banks and other financial institutions attempting to manage litigation flowing from the credit crisis and manage exposure via the distressed debt market.