Hobby v. Burson
110 A.3d 796
Md. Ct. Spec. App.2015Background
- In April 2009 Hobby refinanced her owner-occupied home with Freedom Mortgage; the loan was secured by a deed of trust. Hobby defaulted shortly thereafter.
- Freedom initially could not record the deed properly but later prevailed in a quiet title action establishing the deed as a valid first lien.
- Freedom attempted pre-foreclosure contact: a representative visited the property on Feb. 27, 2010, left a letter, and made phone contact attempts; a formal order to docket initiating foreclosure was filed July 6, 2012.
- Hobby filed bankruptcy in August 2012; the bankruptcy stay was lifted in December 2012. Hobby then participated in court-ordered foreclosure mediation in Feb. 2013; the parties agreed to pause foreclosure while a loan-modification application was reviewed.
- Freedom ultimately denied modification; substitute trustees held a foreclosure sale on May 21, 2013 (Freedom purchased). Hobby had an order signed May 3, 2013 granting dismissal of the foreclosure but that order was not docketed/entered until June 5, 2013 (after the sale).
- Hobby moved to stay or dismiss (arguing Freedom violated HUD regulation 24 C.F.R. §203.604 by not arranging a face-to-face interview) and later filed exceptions to the sale; the circuit court denied her motions and ratified the sale; Hobby appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the foreclosure action should be dismissed for failure to comply with 24 C.F.R. §203.604 (face-to-face interview requirement) | Hobby: Freedom failed to arrange a required face-to-face interview under HUD regulation incorporated into the deed, so foreclosure must be dismissed | Freedom/Substitute trustees: The regulation allows foreclosure if the mortgagee made a "reasonable effort" (letter + at least one trip); Freedom made such efforts Feb. 27, 2010 | Court: Denial of dismissal affirmed — evidence (field contact sheet, photos) showed reasonable efforts, so no abuse of discretion |
| Whether the foreclosure sale must be vacated because a dismissal order had been "granted" before the sale | Hobby: Court signed an order dismissing the foreclosure on May 3, 2013, so the trustees lacked authority to sell on May 21, 2013 | Trustees/Freedom: A judgment/order is effective only when entered/docketed; the order was not entered until June 5, 2013, after the sale | Court: Denial of exceptions affirmed — the signed order was not effective until docketed, so the sale was not illegal |
Key Cases Cited
- Bates v. Cohn, 9 A.3d 846 (Md. 2010) (borrower may move to stay sale and dismiss foreclosure before sale)
- Anderson v. Burson, 35 A.3d 452 (Md. 2011) (denial or grant of injunctive relief in foreclosure reviewed for abuse of discretion)
- Wincopia Farm, LP v. Goozman, 982 A.2d 868 (Md. Ct. Spec. App. 2009) (trial court legal conclusions reviewed de novo)
- Svrcek v. Rosenberg, 203 Md. App. 705 (Md. Ct. Spec. App. 2012) (standards for foreclosure-related injunctive relief)
- Jones v. Rosenberg, 940 A.2d 1109 (Md. Ct. Spec. App. 2008) (appellate review of circuit court ratification of foreclosure sale; clear error standard for facts)
- J. Ashley Corp. v. Burson, 750 A.2d 618 (Md. Ct. Spec. App. 2000) (exceptant bears burden to prove sale invalid and show actual prejudice)
- Wells Fargo Home Mortgage, Inc. v. Neal, 398 Md. 705 (Md. 2007) (deed language incorporating HUD regulations subjects lender to 24 C.F.R. §203.604 requirements)