By Quinn W. Gray, Esq.

Trott Law, P.C. *

USFN Member (IN, MI, MN)

For nearly 250 years, tax foreclosure sales have been used to help recover delinquent property taxes in the United States. In Pung v. Isabella County, the U.S. Supreme Court affirmed the validity of such sales and rejected an argument that threatened to disrupt foreclosure practices nationwide.

In 2004, the Pung family believed they would receive a property tax exemption for their home in Isabella County, Michigan. The County revoked the exemption and when the family refused to pay back taxes, the County began foreclosure proceedings.

Before the tax foreclosure sale, the County determined the property was worth $194,400. The property sold for just $76,008 and was resold 18 months later by the purchaser for $195,000.

A member of the Pung family filed a lawsuit challenging the validity of the tax foreclosure process, and in February 2026, the U.S. Supreme Court considered the following questions:

1.     Should the measure of compensation paid to a tax foreclosed party be based on the fair market value of the property, or the value obtained at the tax foreclosure sale?

2.     Does the tax foreclosure of a property worth more than the taxes owed constitute an excessive fine?

Pung suggested that compensation should be measured by a property’s fair market value at the time of foreclosure, and any tax foreclosure of a property worth more than the taxes owed is an excessive fine. The lack of precedent supporting these arguments proved to be fatal.

In the Court’s nearly 250-year history, it has never stated that a fair market value analysis is appropriate in this context. Nor has it ever construed taxation as a fine. Rather, several cases cited by the Court support opposite conclusions.

In siding with the County, the Court held that the appropriate measure of just compensation is the price obtained at the tax foreclosure sale, so long as the sale is fairly conducted. The Court also agreed with the County on the excessive fine question. The Court remanded the case to the 6th Circuit for further proceedings consistent with the opinion.   

The Impact of this Opinion

By rejecting Pung’s argument, the Court confirmed that governments may continue to use tax foreclosures as a debt collection tool, but potential issues on remand could still impact foreclosure practices.

Notably, in Pung’s merits briefing and at oral argument, he suggested that the County should have attempted to recover the unpaid taxes by less drastic means, such as seizing and selling Pung’s personal property.

In Justice Thomas’s concurrence, he questioned the County’s decision to sell the property. While this issue was not before the Court, Thomas made his thoughts on the process very clear. “What Isabella County did to the Pungs was wrong, and, on my initial view, likely unconstitutional.”

For more information, you can view the full opinion here.

Copyright © 2026 USFN

USFNews - June 24, 2026

By Jordan Beumer, Esq., and Reggie Corley, Esq.

Scott & Corley, P.A. *

USFN Member (SC)

On June 28, 2024, the Supreme Court of the United States, entered its decision in Loper Bright Enters. v. Raimondo[1], which overturned the longstanding precedent set by Chevron U.S.A., Inc. v. Natural Resources Defense Council[2]. This legal development is likely to have a significant impact on the regulatory landscape in the mortgage industry surrounding federal agencies’ constitutional authority to enact federal regulations.

The longstanding Chevron doctrine held that if a federal question had not been directly addressed by Congress, a federal regulatory body could interpret the relevant statute(s), offer an official stance on the issue, and so long as the guideline set by the regulatory body was reasonable, it would be upheld. In other words, the Chevron doctrine, allowed broad deference to federal administrative agencies’ reasonable interpretation of ambiguous federal statutes. When the United States Supreme Court first issued the Chevron decision, over 40years ago, the decision was not necessarily regarded as a particularly consequential one.[3] However, since its inception. the Chevron decision has become prolific and is one of the most important rulings on federal administrative law, cited by federal courts more than 18,000 times.[4]

The Court’s recent decision under Loper Bright is based entirely on Section 7 of the Administrative Procedure Act (the “APA”).[5] Section 7 specifies that courts, not agencies, will decide “all relevant questions of law” arising on review of an agency regulation. The Court elaborated in the opinion as follows:

Section 706 directs that ‘[t]o the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action.’ 5 U.S.C. Section 706. It further requires courts to hold ‘unlawful and set aside agency action, findings, and conclusions found to be …not in accordance with law.’ Section 706(2(A).

The APA thus codifies for agency cases the unremarkable, yet elemental proposition, dating back to Marbury: that courts, not agencies, will decide ‘all relevant questions of law” arising on review of agency action…even those involving ambiguous laws — and set aside any such action inconsistent with the law as they interpret it. And it prescribes no deferential standard for courts to employ in answering those legal questions. That omission is telling, because section 706 does mandate that judicial review of agency policymaking and fact finding be deferential. See Section 706(2)(A) (agency action to be set aside if “arbitrary, capricious, [or] an abuse of discretion); Section 706(2)(E) (agency fact finding in formal proceedings to be set aside if ‘unsupported by substantial evidence’).[6]

In the Loper Bright case, the Court described the Chevron opinion as being at odds with the congressionally authorized language in the Administrative Procedure Act (the federal law that sets out the procedures that federal agencies must follow, as well as the instructions for courts to review actions by those agencies).[7] The Court highlighted that the Administrative Procedure Act directs courts to, “decide legal questions by applying their own judgment” thereby “mak[ing] clear that agency interpretations of statutes — like agency interpretations of the Constitution — are not entitled to deference. . .”[8] The Court further stated that “it thus remains the responsibility of the court to decide whether the law means what the agency says.”  Emphasis added.[9] Additionally, the Court criticized the Chevron doctrine, noting that the doctrine allowed federal agencies “to change course even when Congress has given them no power to do so.”[10]

In practice, The Chevron doctrine utilized a two-stage approach. First, the court would determine whether a particular statute was clear and unambiguous regarding an issue.[11] If the statute was clear, then the court would follow it.[12] If, however, the court found the statute was ambiguous, or silent on the issue, then the court would proceed to step two.[13] At this step, the court would determine whether a federal agency’s interpretation was a permissible or reasonable construction of the statute.[14] If so, the court would uphold the agency’s interpretation.[15] This framework required courts to defer to an agency's interpretation of laws passed by Congress, if its interpretation is reasonable.[16] A major rationale behind this framework was that agencies were thought more likely to have the specific knowledge and expertise required to interpret complex laws and issues above and beyond the court’s ability.[17] The Court stated in Loper Bright that, “Perhaps most fundamentally, Chevron’s presumption is misguided because [federal] agencies have no special competence in resolving statutory ambiguities . . .[c]ourts do. The Framers, [] anticipated that courts would often confront statutory ambiguities and expected that courts would resolve them by exercising independent legal judgment.”[18]

The legal framework set by Chevron may have significant implications on the mortgage industry regulatory bodies, such as the Consumer Financial Protection Bureau (“CFPB”), the Federal Housing Finance Agency (“FHFA”), the Department of Housing and Urban Development (“HUD”), the Office of the Comptroller of the Currency (“OCC”), and their constitutional authority to enact federal regulations.

Before Loper Bright, the CFPB relied on the Chevron doctrine to mandate federal regulations, not prescribed by Congress, in an effort to police the mortgage industry. Per the CFPB’s official website, the CFPB is “a U.S. government agency dedicated to making sure you are treated fairly by banks, lenders and other financial institutions.”[19] Again, per the CFPB’s website the CFPB “provides different forms of guidance and compliance resources to help you understand and comply with our rules and the statutes we implement.” Emphasis added. Notably, under the CFPB’s language on their website, the CFPB admittedly provides its own statutes and rules. Likewise, the FHFA states on its website that the organization, “is responsible for the effective supervision, regulation, and housing mission oversight.”[20] The website further describes the banks that the FHFA will regulate and details how it regulates those banks.[21]

This new precedent may also have an impact on HUD’s use of the Fair Housing Act, which is a broad statute, to gain much of its authority. HUD, like the FHFA and CFPB, has traditionally been given substantial discretion, where it has taken great liberties, in setting guidance and taking enforcement actions against those who are not in strict compliance.[22] Similarly, the OCC states openly on their website that “[b]y maintaining a strong local presence, honing a unique national and international perspective, and seeking stakeholder feedback when setting policy, we can secure clear benefits for OCC-chartered banks and lead on bank supervision.” Emphasis added.[23] The public statements above show a clear understanding of the regulatory authority these organizations perceive to hold under the Chevron doctrine.

Although not yet argued under the recent precedent set by Loper Bright, the statutes and rules implemented by the mortgage industry’s regulatory bodies, using the Chevron doctrine framework, may no longer be upheld by federal courts. They, like all other federal agencies, are now facing a similar and significant dilemma regarding rules and regulations they may implement regarding the authority and power they may or may not have following this new United States Supreme Court decision.

Copyright © 2024 USFN

USFNews - August 7, 2024

*Denotes firm is a 2023 Award of Excellence recipient

By John S. Kay, Esq.

Hutchens Law Firm*

USFN Member (NC, SC)

     On May 17, 2023, the South Carolina Supreme Court issued an Order rescinding the requirements and obligations established by the Court’s previous Administrative Order issued on May 22, 2009, and the revised Order issued by the Court on May 11, 2011.  This new Order affects all loss mitigation activities in foreclosure actions in the state.  

     In response to the foreclosure crisis at the time, the South Carolina Supreme Court issued an Order in 2009 to ensure compliance with the new Home Affordable Modification Program (HAMP) initiated by the U.S. Treasury. The Order developed procedures to establish uniformity in how loss mitigation activity would be handled in the foreclosure process throughout the state. The 2009 Order was amended in 2011 to include provisions and adjustments designed to ensure loss mitigation was occurring in foreclosure cases where required by law.

     Because the HAMP program has now ended, the S.C. Supreme Court has issued its new Loss Mitigation directive stating that the 2009 and 2011 Orders, and their procedures, are no longer necessary. However, the Court has also noted that the 2023 Order is not meant to indicate that lenders and their counsel do not have to comply with all federal regulations regarding loss mitigation.

     In the current Order, the Court made it clear that the Order does not prevent any judge from “…inquiring about the status of loss mitigation or requiring that counsel for a Mortgagor confirm or certify there are no loss mitigation efforts underway, that a Mortgagor has failed to qualify for a program, or a Mortgagor defaulted under a loss mitigation agreement prior to scheduling a final hearing, entering a final order of foreclosure, or conducting a sale.” We expect that some lower courts may establish various procedures or certification requirements regarding the completion or failure of loss mitigation activities in pending cases.      

     At this time, the Masters in Equity and Special Referees that hear foreclosure cases in South Carolina are working on their procedures eliminating the requirements established by the 2009 and 2011 Administrative Orders and establishing what, if any, certification that lender’s counsel will need to provide to the Court to comply with the Supreme Court’s language stated above.

      USFN members in South Carolina will follow these developments closely and will issue further statements once any new rules or procedures by local courts are established.

USFN Copyright @ 2023
USFNews - May 31, 2023

* Denotes firm is a 2022 USFN Award of Excellence recipient.