Claimant Must Exhaust Administrative Remedies Provided For In The Financial Institutions Reform, Recovery, and Enforcement Act of 1989

After defaulting on his Hawaii home mortgage with Washington Mutual Bank ("Wamu") and facing nonjudicial foreclosure, Todd Rundgren (Hello It's Me) and his wife, Michelle (collectively the "Rundgrens"), sued  Wamu and JP Morgan Chase Bank ("Chase Bank") for allegedly fraudulent acts committed by Wamu in an attempt to stop the foreclosure action.

The FDIC had transferred the Rundgrens' loan to Chase Bank pursuant to a purchase and assumption agreement in a FDIC receivership action against Wamu. The federal District Court dismissed the Rundgrens' action against Chase Bank after it determined that it lacked subject matter jurisdiction because the Rundgrens had failed to exhaust their administrative remedies provided for by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"). (Rundgren v. JP Morgan Chase Bank, --- F.3d ---, C.A.9 (Cal.), July 29, 2014).


On appeal, the Ninth Circuit Court of Appeals affirmed the District Court's decision.  The Ninth Circuit reviewed the administrative requirements of FIRREA and determined that the Rundgrens' causes of action in their complaint were claims against Wamu and that the Rundgrens had failed to pursue these claims through the administrative procedures set forth in FIRREA.  The Ninth Circuit noted that FIRREA strips all courts of jurisdiction until a person with a claim against a financial institution in a FDIC receivership exhausts the administrative remedies provided for in FIRREA.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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