Bates v. Cohn
417 Md. 309
| Md. | 2010Background
- Bates purchased a home in 1999 with a GMAC loan guaranteed by FHA; foreclosure was initially dismissed in 2002 when she cured the default.
- Default recurred in 2007; the 2 September 2008 default led GMAC to declare default and proceed toward foreclosure, with sale scheduled for 3 June 2009.
- Between October 2008 and April 2009 GMAC sent multiple notices urging loss mitigation and provided HUD counseling information; Bates engaged with GMAC about a loan modification.
- Bates attempted to submit a loan modification package in early April 2009 after receiving a denial of modification in May 2009; she claimed she never received some package materials.
- Cohn, GMAC’s counsel, served Bates with a Notice to Foreclose and related loss-mitigation guidance; Bates finally submitted updated financial information but GMAC denied modification in May 2009.
- The foreclosure sale occurred as scheduled on 3 June 2009 and was purchased by Geneva LLC; Bates filed post-sale exceptions alleging GMAC’s failure to comply with HUD loss-mitigation requirements.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether loss-mitigation failure may be raised post-sale as an exception | Bates contends loss mitigation failure renders the sale not fairly made. | GMAC argues such claims are barred post-sale by Greenbriar and related precedents as pre-sale defenses. | Pre-sale loss mitigation defenses must be raised before sale; post-sale exceptions limited to procedural irregularities. |
| Whether Bates waived the loss-mitigation defense by not raising it pre-sale | Bates asserts equity allows review of lender misconduct regardless of timing. | Waiver occurs when known defenses are not raised pre-sale, as supported by Greenbriar and Wells Fargo. | Bates's pre-sale loss-mitigation claim was waived; post-sale review is limited to procedural irregularities. |
| Scope of Rule 14-305 post-sale review in light of Greenbriar, Wilson Brothers, and Bierman | Equity power permits broad post-sale examination of mortgage validity and lender conduct. | Rule 14-305 limits post-sale review to procedural irregularities and indebtedness statements. | Rule 14-305 post-sale review is narrow; may not reassess underlying mortgage validity absent pre-sale claims. |
Key Cases Cited
- Greenbriar Condo. Ass'n v. Brooks, 387 Md. 683 (2005) (post-sale exceptions restrict to procedural irregularities and indebtedness; pre-sale injunctive relief favored)
- Wells Fargo Home Mortgage, Inc. v. Neal, 398 Md. 705 (2007) (loss-mitigation violations may support injunctions against foreclosure, not independent contract claims)
- Jones v. Rosenberg, 178 Md.App. 54 (2008) (post-sale exceptions address procedural irregularities; underlying mortgage validity not directly attacked)
- Bierman v. Hunter, 190 Md.App. 250 (2010) (underlying mortgage validity may be challenged post-sale in some contexts; creates tension with Greenbriar)
- Albert v. Hamilton, 76 Md. 304 (1892) (early view of mortgagor rights to challenge mortgage validity)
- Wilson Bros. v. Cooey, 251 Md. 350 (1968) (post-sale review retained broad scope under prior rules; later narrowed by BR6 and 14-305)