Fed. Nat'l Mortg. Ass'n v. Wilson

Decision Date23 July 2013
Docket NumberNo. ED98885,ED98885
PartiesFEDERAL NATIONAL MORTGAGE ASSOCIATION, Plaintiff / Appellant, v. FIONA WILSON, Defendant / Respondent.
CourtMissouri Court of Appeals

Appeal from the Circuit Court

of St. Louis County

Honorable Sandra Farragut-Hemphill


Fiona Wilson (Respondent) lost her home to Federal National Mortgage Association (Fannie Mae) in a foreclosure sale. When Respondent failed to vacate after the sale, Fannie Mae filed an action for unlawful detainer. The trial court entered judgment in favor of Respondent, finding that her right to possession of the property was superior to Fannie Mae's and that Fannie Mae had failed to comply with the notice requirements of Section 534.030.1

Fannie Mae argues three points on appeal. First, it claims it introduced uncontradicted evidence of its right to immediate possession of the property under the unlawful detainer statute. Second, it argues that a lease provision in the deed of trust did not grant Respondent a superior right of possession to the property. Finally, it allegesthat the notice provided to Respondent was adequate and that she was not entitled to receive written demand following the foreclosure sale. We reverse and remand.


On October 29, 2003, Respondent executed a promissory note in favor of Allegiant Bank for $55,000, secured by a Purchase Money First Deed of Trust (deed of trust), for the house and lot located at 14070 Invicta Drive, Florissant, MO 63043 (the property). Wells Fargo Bank, N.A. (Wells Fargo) became the holder of the promissory note sometime thereafter. Wells Fargo appointed Kozeny & McCubbin, L.C. (K&M) the successor trustee under the deed of trust.

On November 1, 2010, Respondent and Wells Fargo entered into a Loan Modification Agreement. With a few exceptions, the terms of the original agreement between Respondent and Allegiant Bank were still in effect. However, the interest rate changed from 5.75% to 2.5% for years one through five of the loan, with increases in years six through twenty-three. Respondent's monthly payment for years one through five was $261.71 in principal and interest plus $319.39 in escrow for a total of $581.10.

Respondent made her mortgage payment of $581.10 in December 2010. She attempted to make her January 2011 and February 2011 payments by phone, but Wells Fargo refused them. On March 29, 2011, Respondent made a payment of $785.13, which represented her monthly principal and interest for the months of January, February, and March. It is unclear why the escrow amount was not included in this payment. Wells Fargo initially accepted the March 29, 2011 payment. However, on May 26, 2011, Wells Fargo sent Respondent a check totaling $1,366.23 for "misapplication reversal." This total equaled the payments made by Respondent in December 2010 and March 2011.

On June 29, 2011, Wells Fargo foreclosed on the deed of trust and instructed K&M to conduct a trustee's sale of the property. Fannie Mae purchased the property at the sale for $59,694.20. A Successor Trustee's Deed under Foreclosure (successor trustee's deed) was executed on July 13, 2011 and recorded on July 14, 2011. On July 22, 2011, Fannie Mae, through its attorneys, sent two letters, identical except for the addressees' names, to the property. One letter was addressed to Respondent, and the other was addressed to "Current Occupant." There is no evidence that either letter was sent by certified or registered mail, and they were not served personally on Respondent or posted on the premises. The letters notified Respondent, in pertinent part, as follows:

The above referenced property was sold at foreclosure sale to Federal National Mortgage Association which has retained Kozeny and McCubbin, L.C. to file an eviction action.
We are attempting to collect a debt and any information obtained will be used for that purpose. Unless within 30 days after you receive this notice you dispute the validity of the debt or a portion thereof, the debt will be assumed to be valid. If you notify us in writing within 30 days after you receive this notice that you dispute the debt or a portion thereof, we will obtain and mail to you verification of the debt. Also, upon your written request within 30 days after you receive this notice, we will provide you with the name and address of the original creditor, if different than the current creditor.
The commencement of an eviction action does not affect the rights as set forth herein.2
For further information, please contact this office by calling (314) 991-0255 and asking for the eviction department. You may also email the eviction department at ev@km-law.com. In all communications please state your name and property address.

Respondent refused to leave the property after receiving notice of the foreclosure sale. Fannie Mae subsequently filed a Complaint in Unlawful Detainer in the Circuit Court of St. Louis County on July 25, 2011. Trial was held on June 18, 2012. In its July 18, 2012 Judgment and Order, the trial court found that Respondent did not default on themortgage with Wells Fargo. The trial court also found that Respondent was "ready, willing and able to fulfill her obligations under the original Note, Security Instrument and Loan Modification Agreement, but Wells Fargo did not fulfill its contractual obligations and refused [Respondent's] payments." Accordingly, because Respondent was never in default and remained willing to fulfill her contractual obligations, the court found that she never lost her right to possession of the property. Because her right to possession predated Fannie Mae's title in the property, the trial court held that Respondent's right to possession of the property was superior to Fannie Mae's.

The trial court also determined that Fannie Mae had failed to provide Respondent with proper notice pursuant to Section 534.030.1. The court read that statute to require a written demand for possession after the foreclosure of a mortgage or deed of trust before a person is guilty of an unlawful detainer. The trial court concluded that Fannie Mae failed to send a written demand to Respondent in addition to the notice of foreclosure and therefore was not in compliance with the notice requirements of Section 534.030.1.

Finally, the trial court found that if Respondent was a tenant of the property under a lease provision in the deed of trust, Fannie Mae was also required to provide her notice pursuant to Sections 534.030.2 and 534.030.3. The court determined that Fannie Mae failed to provide Respondent with such notice and was therefore in violation of the statutes. This appeal followed the trial court's judgment.

A. Standard of Review

On review of this court-tried case, we will affirm the trial court's judgment unless there is no substantial evidence to support it, it is against the weight of the evidence, or iterroneously declares or applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). We review evidence in the light most favorable to the prevailing party, giving that party the benefit of all reasonable inferences and disregarding contrary evidence and inferences. Stamatiou v. El Greco Studios, Inc., 898 S.W.2d 571, 573 (Mo. App. E.D. 1995). We defer to the trial court's factual findings because the trial court is in a superior position to assess credibility. Mullenix-St. Charles Props. v. St. Charles, 983 S.W.2d 550, 555 (Mo. App. E.D. 1998). However, we review the trial court's conclusions of law de novo. Id.

B. Right to Possession

In its first point on appeal, Fannie Mae alleges the trial court erred in entering judgment for Respondent because it introduced uncontradicted evidence of its right to immediate possession of the property under the unlawful detainer statute. Fannie Mae argues further that Respondent's testimony that she was not in default prior to the foreclosure sale is a statutorily prohibited challenge to the validity of the sale and the merits of its title. We agree.

Unlawful detainer is defined in Section 534.030.1. It provides:

When any person willfully and without force holds over any lands, tenements, or other possessions, after the termination of the time for which they were demised or let to the person, or the person under whom such person claims; or after a mortgage or deed of trust has been foreclosed and the person has received written notice of a foreclosure; or when premises are occupied incident to the terms of employment and the employee holds over after the termination of such employment; or when any person wrongfully and without force, by disseisin, shall obtain and continue in possession of any lands, tenements or other possessions, and after demand made, in writing, for the delivery of such possession of the premises by the person having the legal right to such possession, or the person's agent or attorney, shall refuse or neglect to vacate such possession, such person is guilty of an "unlawful detainer."

An action for unlawful detainer is a limited statutory action where the sole issue to be decided is the immediate right of possession to a parcel of real property. US Bank v. Watson, 388 S.W.3d 233, 234-35 (Mo. App. E.D. 2012) (citations omitted). It does not address questions of ownership or the validity of title. Wells Fargo Bank v. Smith, 392 S.W.3d 446, 456 (Mo. banc 2013). To prevail in an unlawful detainer action, a plaintiff must demonstrate (1) that the property was purchased at a foreclosure sale, (2) the defendant received notice of the foreclosure, and (3) the defendant refused to surrender possession of the property. US Bank v. Watson, 388 S.W.3d 233, 236 (Mo. App. E.D. 2012); JP Morgan Chase Bank v. Tate, 279 S.W.3d 236, 239 (Mo. App. E.D. 2009).

Fannie Mae has successfully proven each of these elements. It is undisputed that Fannie Mae purchased the property at a foreclosure sale. It is also uncontested that the successor trustee's deed stated that K&M gave written notice of the...

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