CitiMortgage, Inc. v. Carpenter
2012 Ohio 1428
Ohio Ct. App.2012Background
- CitiMortgage, Inc. held Carpenter's promissory note and mortgage (2005 refi).
- Carpenter sought a loan modification in Dec. 2009 and was told she was approved for a non-HAMP modification.
- Carpenter never received modification paperwork.
- Carpenter made Jan.–Mar. 2010 payments, skipped Apr–May 2010, paid June 2010, then defaulted.
- CitiMortgage accelerated the loan and filed foreclosure; trial court granted summary judgment for CitiMortgage.
- Carpenter appealed arguing CitiMortgage failed to comply with HAMP notice/eligibility requirements and that such noncompliance constitutes an affirmative defense.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Carpenter has an affirmative defense based on HAMP compliance. | Carpenter asserts CitiMortgage failed to follow HAMP directives. | Carpenter argues noncompliance with HAMP directives allows a defense to foreclosure. | No affirmative defense; HAMP directives lack legal force to create a private defense. |
| Whether Carpenter is an intended third-party beneficiary to the CitiMortgage–Freddie Mac servicing contract. | Carpenter contends she is a third-party beneficiary and can enforce HAMP terms. | Carpenter is not a party or intended beneficiary to the contract. | Carpenter not a third-party beneficiary; no standing to assert an affirmative defense. |
| Whether Freddie Mac Bulletin 2009-28 and Treasury Directive 09-08 are legally enforceable as a basis for an affirmative defense. | Terms are mandatory and could create a defense. | Even if mandatory, they do not have the force of law to create a private right. | Even mandatory terms do not have the force of law; no affirmative defense exists. |
Key Cases Cited
- Smith v. Five Rivers MetroParks, 134 Ohio App.3d 754 (2d Dist. 1999) (summary-judgment standard reviewed de novo)
- Bankers Life Co. v. Denton, 120 Ill. App.3d 576 (Ill. App. Ct. 1983) (HUD servicing requirements not necessarily law unless codified)
- Grant Thornton v. Windsor House, Inc., 57 Ohio St.3d 158 (1991) (only those terms with force of law create private rights in contracts)