899 A.2d 208 (Md.App. 2006), 1751, Neal v. Wells Fargo Home Mortg., Inc.

Docket Nº:1751
Citation:899 A.2d 208, 168 Md.App. 747
Opinion Judge:BARBERA, Judge.
Party Name:Alan NEAL v. WELLS FARGO HOME MORTGAGE, INC.
Attorney:Scott C. Borison (Douglas B. Bowman, Legg Law Firm, L.L.C., on the brief), Frederick, MD, for Appellant., Mark D. Maneche (Michael Schatzow, Venable, L.L.P., on the brief), Baltimore, MD, for Appellee.
Case Date:May 26, 2006
Court:Court of Special Appeals of Maryland
 
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Page 208

899 A.2d 208 (Md.App. 2006)

168 Md.App. 747

Alan NEAL

v.

WELLS FARGO HOME MORTGAGE, INC.

No. 1751

Court of Special Appeals of Maryland.

May 26, 2006

Page 209

Scott C. Borison (Douglas B. Bowman, Legg Law Firm, L.L.C., on the brief), Frederick, MD, for Appellant.

Mark D. Maneche (Michael Schatzow, Venable, L.L.P., on the brief), Baltimore, MD, for Appellee.

Panel: HOLLANDER, DEBORAH S. EYLER, and BARBERA, JJ.

BARBERA, Judge.

[168 Md.App. 749] This appeal involves the Housing and Urban Development's ("HUD") mortgage servicing requirements. See 24 C.F.R. §§ 203.500 et seq. (1996). Those requirements were issued pursuant to the National Housing Act ("the Act"), 12 U.S.C. § 1701 (1934). 1 The issue before us is whether, notwithstanding the lack of a private right of action to enforce those regulations, a mortgagee can agree as a term of a deed of trust to comply with those requirements and, upon noncompliance, become liable to the mortgagor for breach of contract. Although we answer that question in the affirmative, we must remand this case so that the circuit court can decide whether the parties to this appeal had such an agreement.

Appellant, Alan Neal ("Neal"), has a residential mortgage loan that appellee, Wells Fargo Home Mortgage, Inc. ("Wells Fargo"), services. A Deed of Trust ("Deed") secures the loan, and the Federal Housing Authority ("FHA") insures it. For purposes of this appeal, it is necessary to know only that Neal defaulted on the mortgage and Wells Fargo initiated foreclosure proceedings. Neal believes that Wells Fargo breached the terms of Paragraph 9(d) of the Deed, which refers to HUD foreclosure regulations. Paragraph 9(d) provides:

Regulations of HUD Secretary. In many circumstances regulations issued by the Secretary will limit Lender's rights in the case of payment defaults to require immediate payment in full and foreclose if not paid. This Security Instrument does not authorize acceleration

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or foreclosure if not permitted by regulations of the Secretary.

[168 Md.App. 750] Although the regulations referred to in that paragraph are not identified, the parties agree that they are HUD's mortgage servicing requirements.

Neal filed a complaint against Wells Fargo in the Circuit Court for Frederick County for breach of contract and for a declaratory judgment. 2 Wells Fargo countered with a motion for summary judgment, arguing that the National Housing Act and the mortgage servicing requirements promulgated thereunder do not provide a private cause of action to enforce compliance with the regulations. Neal opposed that motion and filed his own summary judgment motion, again contending that Wells Fargo breached the provision in paragraph 9(d) of the Deed.

The parties' motions came on for a hearing on September 7, 2004. At the conclusion of the hearing, the court announced its intention to grant summary judgment in favor of Wells Fargo, stating that "the regulations which were set out and reflected in the handbook 3 are there for the regulatory scheme and not for the benefit of the individual borrower." Consequently, the court reasoned, there was "not a private cause of action under th[o]se specific provisions...." Two days later, the court issued an order granting Wells Fargo's summary judgment motion and ordering the Clerk to enter judgment in favor of Wells Fargo and against appellant. This timely appeal followed the docketing of that order.

Neal presents two questions on appeal, which we have condensed into one: Was the circuit court legally correct in granting summary judgment in favor of Wells Fargo? For [168 Md.App. 751] the following reasons, we vacate the judgment and remand for further proceedings.

DISCUSSION

The circuit court determined that Wells Fargo was entitled to summary judgment because Neal has no private cause of action to enforce the HUD-promulgated mortgage servicing requirements to which paragraph 9(d) of the Deed refers. Neal contends that the court's ruling is wrong as a matter of law. He argues that incorporation of the HUD regulations into the Deed provides him with the right to enforce the regulations in a breach of contract action. 4 Directing us to the language of paragraph 9(d) that "[t]his Security Instrument does not authorize acceleration or foreclosure if not permitted by regulations of the Secretary[,]" Neal asserts that Wells Fargo breached the terms of the Deed by initiating foreclosure without first complying with the relevant HUD regulations.

Wells Fargo counters that the HUD servicing requirements on which Neal's complaint is premised do not permit a private right of action against Wells Fargo. Wells Fargo further argues that Neal's "attempt

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to plead his claim as a breach of contract claim [and a claim for declaratory relief] does not allow him to circumvent the clear law prohibiting private enforcement of HUD regulations." Therefore, Wells Fargo maintains, the court properly granted summary judgment in its favor.

A motion for summary judgment may be granted when the court determines that "there is no genuine dispute as to any material fact and that the party is entitled to judgment as a matter of law." Md. Rule 2-501(a). These are legal questions; consequently, the standard by which we [168 Md.App. 752] review the decision is "whether the trial court was legally correct." Converge Servs. Group, LLC v. Curran, 383 Md. 462, 476, 860 A.2d 871 (2004) (citation and internal quotation marks omitted). As a general rule, this Court limits its review of the grant of summary judgment to the grounds relied upon by the trial court. See Ross v. State Bd. of Elections, 387 Md. 649, 667, 876 A.2d 692 (2005). When, however, an "alternative ground is one upon which the circuit court would have had no discretion to deny summary judgment," we may affirm a grant of summary judgment "for a reason not relied on by the trial court." Vogel v. Touhey, 151 Md.App. 682, 706, 828 A.2d 268 (citation and internal quotation marks omitted), cert. denied, 378 Md. 617, 837 A.2d 927 (2003). In...

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