9 A.3d 846 (Md. 2010), 28, Bates v. Cohn

• Judge: Argued before BELL, C.J., HARRELL, BATTAGLIA, GREENE, MURPHY, ADKINS and BARBERA, JJ.
• Parties: Sonja D. BATES v. Edward S. COHN, et al.
• Date: 16 December 2010
• Docket Number: 28
• Court: Maryland Court of Appeals
• Citation: 9 A.3d 846,417 Md. 309

Page 846

9 A.3d 846 (Md. 2010)

417 Md. 309

Sonja D. BATES

v.

Edward S. COHN, et al.

No. 28

Court of Appeals of Maryland

December 16, 2010

Page 847

Vicki King Taitano (Legal Aid Bureau, Riverdale), on brief, for appellant.

Eric A. Frechtel (Marc James Ayers of Bradley Arant Boult Cummings LLP, Washington, D.C.), on brief, for appellees.

Robert H. Hillman (Magazine & Hillman, P.C., Rockville), on brief, for appellee.

Argued before BELL, C.J., HARRELL, BATTAGLIA, GREENE, MURPHY, ADKINS and BARBERA, JJ.

OPINION

HARRELL, J.

[417 Md. 311] Sonja D. Bates ("Appellant"), whose house was sold at foreclosure, sought, in the context of post-sale exceptions, a

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court-ordered "do-over" based on allegations tat essentially her lender failed to allow her to take advantage of pre-sale loss mitigation efforts required by federal regulations. For reasons we shall explain, we agree with the Circuit Court for Montgomery County that Appellant, by failing to raise a ripe claim in this regard prior to the sale of her house, waived effectively that claim. Ordinarily, such a claim must be asserted before sale as a ground to stay or enjoin the proposed sale.

I.

On the legal question upon which the Circuit Court decided this case, the trial judge was not required to engage in much fact-finding, despite hearing the testimony of two witnesses and receiving copious documentary evidence. Thus, the "facts" that we shall recite hereafter, largely for context, are an amalgam of the parties’ evidence and proffers in this record. Were we not to agree with the legal ground of the trial court’s ruling, a remand for further fact-finding would have been necessary.

In February 1999, Bates purchased a residence at 8706 Tryal Court, Gaithersburg, Maryland. She did so with a $148,773.00 loan extended by Appellees, GMAC Mortgage [417 Md. 312] LLC ("GMAC"), and guaranteed by the Federal Housing Administration ("FHA"). In 2002, when Bates fell behind in her mortgage payments, GMAC instituted foreclosure proceedings, but those proceedings were dismissed before sale when Bates resolved the default.

In 2007, Bates encountered renewed difficulty paying her deed of trust note.¹ Although her account with GMAC fell into (and never left) default beginning in October 2007, the lender-declared default that led to the relevant 3 June 2009 foreclosure sale occurred on 2 September 2008. At that point in time, she was $3,072.76 in arrears, according to GMAC.²

Between the declaration of default and notice of the foreclosure sale, GMAC and Bates were in contact on multiple occasions, beginning with the 13 October 2008 notice of default sent to her by GMAC. The notice apprized Bates, among other things, that there was an "unresolved default on [her] account." It detailed briefly four options "which may be available to help avoid a foreclosure action," attached a pamphlet entitled "How to Avoid Foreclosure," and provided telephone numbers for federal Housing and Urban Development ("HUD") counselors and GMAC loss mitigation representatives.

The next month, on 3 November 2008, GMAC sent another letter to Bates, informing her that her "mortgage loan is in default," and without full payment, it "will ... begin foreclosure proceedings." The letter made clear, however, that she "ha[s] the right to assert or defend the non-existence of a default [,] and [she] may have other rights under state law." [417 Md. 313] It again encouraged Bates to call "immediately" HUD or GMAC loan counselors.

On 26 November 2008, Bates responded by calling a GMAC representative. She stated that, although she was not employed

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full-time from November 2007 to April 2008, and had been working only part-time since April 2008, she was starting a new full-time job in December 2008. She inquired about a loan modification. The GMAC representative asked her to provide updated financial information and to call back when her finances improved.

Several days later, on 3 December 2008, GMAC sent another letter to Bates, reminding her that she had "failed to reinstate [her] account" and, as a result, "it may be sent to an attorney to initiate foreclosure action," after which she "will lose title to the property." The letter again provided the number for GMAC loan counselors, "if [she] wish[ed] to discuss possible alternatives...."

On 6 January 2009, GMAC referred the matter to its Maryland foreclosure counsel, Cohn, Goldberg & Deutsch, LLC ("Cohn"). The firm sent a letter, dated 7 January 2009, to Bates, explaining that "[t]he mortgage for the property in which you are living is about to be foreclosed...."

Cohn mailed a second letter, on 13 January 2009, reiterating to Bates that her mortgage loan matter had been referred to its office for legal action. Three days later, Cohn sent, by certified mail, a Notice of Intent to Foreclose, which urged Bates to "contact [a] Loss Mitigation Manager ... immediately," as "we may begin foreclosure ... [forty-five] days after this Notice is sent and [ninety] days from the default date." Before the trial court, Bates acknowledged receipt of the notice. Cohn filed an order, on 13 March 2009, to Docket Foreclosure of Residential Property, in the Circuit Court for Montgomery County.

On 1 April 2009, 125 days following her 26 November 2008 verbal response to GMAC’s declaration of default, Bates phoned GMAC again. She represented to the trial court that she had not pursued more aggressively a loan modification because, according to her testimony, she was "waiting for the [417 Md. 314] new ... [federal Home Affordable Modification Program ("HAMP") ] to become available...." As Bates discovered, however, HAMP proved ultimately inapplicable to her situation.³ Bates told the GMAC representative that she remained interested in a loan modification. The representative informed her that she would have to complete and submit the financial "package" for GMAC’s analysis. GMAC records indicated that it sent to Bates such a "package" of forms and instructions the following day (2 April 2009); Bates denied receiving it.

Later on April 1, Bates also called Cohn. Informing a Cohn employee that she was seeking a loan modification from GMAC, Bates inquired as to the status of the firm’s case regarding her loan default. The employee told Bates that the date at which her property would be sold at foreclosure had not been set yet.

Subsequently, Cohn employed a private process server to serve Bates with the Order to Docket and accompanying documents, including a required consumer notice that "urged [her] to obtain legal advice to discuss other options to stop the foreclosure sale," like "filing a motion for injunction with the Circuit Court...." Moreover, the consumer notice made clear that such "[a] motion for injunction ... must be filed before the foreclosure sale occurs." Finally, the notice indicated that if Bates is "interested in selling [her] home to avoid a foreclosure sale, [she] may wish to contact a licensed real estate broker or salesperson as soon as possible."

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After two unsuccessful attempts to serve Bates personally (on 9 and 10 April 2009) with these documents, the process server posted them on the front door of her home. On 14 April 2009, Cohn also sent the documents to Bates by certified mail, resulting in two additional, but unsuccessful, delivery attempts.

The next day, 15 April 2009, Bates called GMAC, stating that she had not received the financial "package" documents [417 Md. 315] for loan modification consideration. GMAC informed her that she could download the necessary documents from GMAC’s website. She did so, completed the forms, and mailed them to GMAC later that day.

Two weeks later, on 27 April 2009, Bates called GMAC to inquire about the "package," as she had not received a response. GMAC told her to re-submit the information to its "urgent loss mitigation" fax number, which she did. The re-submitted information indicated that, although Bates wanted to retain the property, she also had contacted a realtor to discuss listing the house for sale. She also stated that her monthly liabilities were $2,793.04 and her monthly income was $1,500.00.

Concerned that the foreclosure sale date may have been scheduled, Bates called a Cohn employee, on 6 May 2009, who told her that a sale date had not been scheduled yet. Bates then called a GMAC representative, posed the same question, and received the same response. She also told the GMAC representative that she had $10,000.00 in her bank account, assertedly enough to cover the outstanding default amount (per the 7 April 2009 Notice of Intent to Foreclose, one of the many documents accompanying the Order to Docket). She proposed to commit the money to satisfying the loan default and accrued costs only if her loan modification request was granted.⁴

After the GMAC representative transferred her to a GMAC loan counselor, Bates told the counselor that receiving a loan modification would give her more time to sell the house. [417 Md. 316] Bates informed the counselor that her financial situation had changed, prompting the counselor to ask Bates for an updated financial package to analyze.

On the same day (6 May 2009), GMAC reviewed Bates’s financial package (assumedly the one submitted on 27 April 2009), and denied her modification request because her monthly expenses exceeded her monthly income by $1,453.62. GMAC sent Bates a letter to that effect. Two days later, the foreclosure sale date was scheduled for 3 June 2009. On 13 May 2009, Cohn sent Bates a letter iterating that date. Despite these developments, GMAC also sent Bates a letter, on 18 May 2009, acknowledging Bates’s inquiry (presumably referring to the new information relayed by Bates in her 6...