Shepherd v. Burson
427 Md. 541
Md.2012Background
- Maryland enacted RP § 7-105.1 to require 45 days’ advance written notice before foreclosures with specifics including the secured party’s identity.
- Notice form contemplates multiple secured parties and cross-references foreclosure rules and COMAR definitions.
- Shepherd ( borrower) obtained a $416,900 loan secured by a deed of trust; IndyMac Bank originated the loan and later transferred assets to IndyMac Federal, then OneWest Bank.
- Freddie Mac owned the loan during the foreclosure period; OneWest was identified in the initial Notice of Intent to Foreclose as the secured party.
- Shepherd filed bankruptcy petitions that stayed foreclosures; the foreclosure action proceeded after stays were lifted, with Freddie Mac ownership disclosed in October 2009.
- The circuit court denied dismissal for defective notice, and the Court of Special Appeals affirmed; the Supreme Court granted certiorari to decide the notice scope and remedy.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Meaning and scope of 'the secured party' under RP 7-105.1 | Shepherd argues Freddie Mac, as loan owner, is the secured party and must be named. | OneWest, as holder of the note, is a secured party; Freddie Mac may also be, but notice depends on statutory context. | Both parties can be secured parties; the statute does not limit to a single entity. |
| Whether the Notice of Intent to Foreclose was defective for omitting Freddie Mac | Omission of Freddie Mac rendered notice defective and misleading. | Notice identified OneWest and provided modification contact; Freddie Mac’s ownership was disclosed elsewhere; not fatal. | Not fatal; identifying all secured parties is preferred, but omission did not require dismissal given other notice content and prior Freddie Mac disclosure. |
| Remedy for defective notice | Defect should lead to dismissal of foreclosure. | Remedy may be discretionary; Rule 14-207.1 allows remediation, not automatic dismissal. | Dismissal not required; court properly exercised discretion to deny dismissal. |
Key Cases Cited
- U.S. Bank Nat’l Ass’n v. Guillaume, 209 N.J. 449 (N.J. 2012) (notice defect in lender identification can be remedied; dismissal not automatic)
- Curtis v. U.S. Bank Nat’l Ass’n, 427 Md. 526 (Md. 2012) (notice issues; context of foreclosure and remedies)
- Maddox v. Cohn, 424 Md. 379 (Md. 2012) (purpose of advance notice to facilitate loan modification)
- Anderson v. Burson, 424 Md. 232 (Md. 2011) (UCC governs secured party definitions for notes and security interests)
- Johnson v. State, 274 Md. 29 (Md. 1975) (in pari materia interpretation principle)