Beal Bank, SSB v. Nassau County

In Beal Bank, SSB v. Nassau County, 973 F. Supp. 130, 134 (1997), Beal Bank, holder of a 1987 mortgage by assignment from the FDIC, sued for declaratory relief on these facts: taxes on the property fell in arrears and in 1992, the county sold the tax lien on the property to defendant Medcor. Three days later, the FDIC took over the mortgagee as receiver. The county soon sent the FDIC a notice to redeem, to which the FDIC failed to respond. In 1994, following the expiration of the redemption period, the county issued a tax deed to Medcor, transferring title to the property to Mecor. The FDIC did not consent to the sale. In 1995, the FDIC transferred its mortgage interest to Beal Bank. The court saw the dispute as involving the questions whether the FDIC's arrival on the scene after the initial sale of the lien to Medcor favored the county and whether Beal Bank, as assignee, was entitled to assert protections available to the FDIC. The court held, first, that the FDIC had not, by its silence, consented to the 1994 sale to Medcor, and that the bar in 1825 against elimination of the FDIC's rights by foreclosure related to a lien which pre-existed its receivership. The court then held that Beal Bank, as assignee, could assert the FDIC's rights to object to the foreclosure, "because providing the FDIC's successors in interest with less rights than the FDIC would effectively deprive the FDIC of the ability to market the loans it takes over in order to recoup whatever funds it can." Beal Bank, at 134. The court went on to say that Beal Bank, as assignee, remained obligated to pay the tax lien held by Medcor.