Real Property – Mortgages – Foreclosure – Former FDIC Asset – Subject Matter Jurisdiction – FIRREA

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The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) limits judicial review so as to enable the Federal Deposit Insurance Co. to act expeditiously to resolve and liquidate failed financial institutions. Even though the jurisdictional bar in 12 U.S.C. § 1821(d)(13)(D) is not limited to creditors, we believe it is limited to claims against a failed financial institution or its receiver and should not be extended to include foreclosure claims against mortgagors.

We affirm the master-in-equity’s ruling that FIRREA did not deprive the court of jurisdiction over this foreclosure action.

The institution that held the appellant-borrowers’ mortgage failed, and the FDIC became its receiver. The FDIC subsequently assigned appellants’ mortgage to respondent NCP Pilgrim, LLC. Appellants were in default, and NCP initiated foreclosure proceedings.

“Except as otherwise provided in this subsection, no court shall have jurisdiction over– (i) any claim or action for payment from, or any action seeking a determination of rights with respect to, the assets of any depository institution for which the [FDIC] has been appointed receiver, including assets which the [FDIC] may acquire from itself as such receiver; or (ii) any claim relating to any act or omission of such institution or the [FDIC] as receiver.” 12 U.S.C. § 1821(d)(13)(D).

Appellants believe the above section divests South Carolina courts of subject matter jurisdiction over this action because their lender was a “depository institution” and the FDIC was appointed receiver of its assets.

FIRREA is inapplicable for two reasons.

First, FIRREA does not apply when, as here, the FDIC relinquishes its rights to a mortgage and note in an assignment agreement.

Second, FIRREA is inapplicable because subjecting foreclosure actions against defaulting mortgagors to the provisions of FIRREA would be antithetical to FIRREA’s manifest purpose: to enable the FDIC to resolve and liquidate expeditiously the hundreds of failed financial institutions that existed throughout the country at the time of FIRREA’s enactment.

Section 1821(d)(13)(D)’s limitation on judicial review was interpreted as a jurisdictional bar—something on which appellants rely in their brief—because of a concern that creditors of failed financial institutions would opt out of the administrative review. While we recognize that FIRREA’s jurisdictional bar is not limited to creditors, we believe it is limited to claims against a failed financial institution or its receiver and should not be extended to include foreclosure claims against mortgagors. In the present case, respondent is neither a creditor nor any other type of party seeking to determine its rights against appellants’ lender as a failed financial institution or the FDIC as its receiver. Instead, respondent properly initiated this foreclosure action against appellants. Therefore, FIRREA’s jurisdictional bar is inapplicable to this action.

Affirmed.

NCP Pilgrim, LLC v. Cercopely (Lawyers Weekly No. 012-039-23, 7 pp.) (Per Curiam) Appealed from Dorchester County (James Chellis, Master-in-Equity) Robert Brutton Varnado for appellants; Russell Pierce Patterson and Lauren Patterson Williams for respondent. South Carolina Court of Appeals (unpublished)