Andrews v. O'Sullivan ( 2022 )

Javonna Andrews v. Laura O’Sullivan, et al., Nos. 1018 and 1553, Sept. Term 2021
Opinion by Wells, C. J.
FORECLOSURES—DENIAL OF A MOTION TO STAY—FINAL
JUDGMENTS—INTERPLAY BETWEEN RULE 8-202, RULE 2-534, AND
COURTS AND JUDICIAL PROCEEDINGS ARTICE SECTION 12-303
We hold that the denial of the motion to stay was an appealable interlocutory order, final
in nature, under Courts and Judicial Proceedings Article of the Annotated Code of
Maryland, § 12-303 (3)(iii). The time to note an appeal was tolled until the court disposed
of appellant’s subsequently filed Rule 2-534 motion to alter or amend. Consequently,
appellant’s appeal in No. 1018, filed within 30 days of the denial of the motion to alter or
amend, was timely.
Circuit Court for Prince George’s County
Case No. CAEF-19-18450
REPORTED
IN THE APPELLATE COURT
OF MARYLAND*
Nos. 1018 and 1553
September Term, 2021
____________________________________
JAVONNA ANDREWS
v.
LAURA O’SULLIVAN, ET AL.
______________________________________
Wells, C.J.,
Graeff,
Arthur,
JJ.
______________________________________
Pursuant to the Maryland Uniform Electronic Legal Materials
Act (§§ 10-1601 et seq. of the State Government Article) this
Opinion by Wells, C.J.
document is authentic. ______________________________________
2022-12-29 10:48-05:00
Filed: December 29, 2022
Gregory Hilton, Clerk
* At the November 8, 2022 general election, the voters of Maryland ratified a constitutional
amendment changing the name of the Court of Special Appeals of Maryland to the
Appellate Court of Maryland. The name change took effect on December 14, 2022.
In this consolidated appeal, appellant, Javonna Andrews, challenges a foreclosure
action in which her home was sold by appellants, Laura H. G. O’Sullivan, Rachel Kiefer,
Michael T. Cantrell, and Erin N. Shaffer (hereinafter “Substitute Trustees”). In her appeal,
Andrews presents the following questions:
1. Did the trial court err when it allowed the foreclosure action to move
forward when appellees repeatedly failed to provide the required pre-
mediation documentation as required under law?
2. Did the trial court err when it failed to stay the foreclosure action until
all loss mitigation options had been exhausted?
3. Did the trial court err when it failed to dismiss the foreclosure action
due to affidavits provided by appellees that contained false
information?
4. Did the trial court err when it failed to dismiss the foreclosure action
due to appellees’ “unclean hands”?
FACTUAL AND PROCEDURAL BACKGROUND
In December 2006, Andrews executed a promissory note and deed of trust in the
amount of $260,000 for the property located at 7611 Swan Terrace in Hyattsville,
Maryland. In February 2018, Andrews defaulted on the loan, and the Substitute Trustees
filed a foreclosure proceeding on June 12, 2019. On December 20, 2019, Andrews filed a
Motion to Stay and Dismiss the Foreclosure Proceedings, Request for Discovery and
Request for Hearing (“Motion to Stay”). On January 13, 2020, the circuit court issued an
order setting Andrews’ motion for a hearing and staying any pending sale in the meantime.
However, because of a docketing error, the Substitute Trustees were unaware of the court’s
order, and subsequently sold the property the following day, on January 14, 2020. At a
hearing on February 11, 2020, the court vacated the sale of the house, stayed the foreclosure
action, and set Andrews’ Motion to Stay in for a hearing. On April 1, 2020, the court issued
an order correcting the docket entry for February 11, 2020 to stay the ratification of the
sale instead of vacating the sale.
Due in part to the COVID-19 pandemic, the ratification of the sale was stayed for
over a year. The court finally held a hearing on Andrews’ Motion to Stay on May 11, 2021,
concluding by denying Andrews’ motion. On May 21, 2021, Andrews filed a “Motion for
Reconsideration or in the Alternative Motion to Alter or Amend Judgment Pursuant to Md.
Rule 2-534.” On July 7, 2021, the court denied Andrews’ motion, and the denial was
docketed on August 4, 2021. Andrews then filed a notice of appeal with the circuit court
on September 2, 2021 (Appeal 1018). On November 15, 2021, the court ratified the sale.
Andrews then filed another notice of appeal on November 23, 2021 (Appeal 1553).
Additional facts will be discussed below.
DISCUSSION
I. Andrews’ Appeals are Properly Before Us
In their brief, the Substitute Trustees make several arguments urging us to dismiss
both appeals. First, concerning Appeal 1018, the Substitute Trustees argue that Andrews’
notice of appeal was untimely, and we are therefore without jurisdiction. 1 And in Appeal
1
In Rosales v. State, 463 Md. 552 (2019), the Court of Appeals, now the Supreme
Court of Maryland, see footnote 7, held that Rule 8-202(a) “is a claim-processing rule, and
not a jurisdictional limitation on this Court.” Id. at 568. However, even though it may not
be jurisdictional, filing a timely notice of appeal is still binding on appellants, and an
untimely appeal will be dismissible under Rule 8-602(b). If we were to dismiss for
untimeliness, it would not be for want of jurisdiction.
2
1553, the Substitute Trustees argue that the appeal is an “improper post-sale appeal seeking
to contest pre-sale events.” We disagree with the Substitute Trustees’ arguments and
decline to dismiss either appeal.
As for appeal No. 1018, the Substitute Trustees contend that Andrews’ notice of
appeal, filed on September 2, 2021, was not filed within 30 days of the court’s denial of
the Motion to Stay, as required by Rule 8-202(a).2 Further, Substitute Trustees assert that
Andrews’ Rule 2-5343 motion to alter or amend did not toll the time to appeal under Rule
8-202(c),4 because 2-534 motions are reserved for “final judgments” and the court’s denial
of a stay is not a final judgment. We disagree.
This issue rests on whether “judgment,” as used in Rule 2-534, means a final
judgment, i.e., a judgment that disposes of all issues, or an appealable interlocutory order,
i.e., an order that while not “final,” is still appealable pursuant to Md. Code, Cts. and Jud.
Proc. (“CJP”) § 12-303.5 First, we note that Rule 1-202(o) defines “judgment” as “any
2
Md. Rule 8-202(a) states: “Except as otherwise provided by this Rule or by law,
the notice of appeal shall be filed within 30 days after entry of the judgment or order from
which the appeal is taken.”
3
Md. Rule 2-534 states: “In an action decided by the court, on motion of any party
filed within ten days after entry of judgment, the court may open the judgment to receive
additional evidence, may amend its findings or its statement of reasons for the decision,
may set forth additional findings or reasons, may enter new findings or new reasons, may
amend the judgment, or may enter a new judgment.”
4
Md. Rule 8-202(c) allows for certain post-judgment motions, including 2-534
motions, to toll the period of time in which to file a notice of appeal with this Court.
5
CJP § 12-303 outlines orders in which interlocutory appeals are allowed. Included
in the list of appealable orders is: “(3) An order: (iii) Refusing to grant an injunction[.]”
3
order of court final in its nature entered pursuant to these rules.” In that respect, “judgment”
does not equate to the “final judgment” addressed in Rule 2-602.6
Additionally, in Tierco Maryland, Inc. v. Williams, 381 Md. 378 (2004), the
Supreme Court of Maryland (at the time called the Court of Appeals of Maryland)7 noted
that the phrase, “the judgment” in Rule 2-534 refers to the “particular judgment to which
the motion is directed.” Id. at 398. The Court continued: “The conclusion we draw from
the plain language of these rules is that entry of final judgment as to all claims of all parties
in a civil case is not necessarily a requirement for the filing of post-judgment motions.” Id.Further, in Doe v. Sovereign Grace Ministries, Inc., this Court stated that under Rule 8-
202(c), when a Rule 2-534 post-judgment motion has been filed within ten days “of the
entry of an otherwise final judgment (or the entry of another appealable order), the time
for filing a notice of appeal is tolled[.]” 217 Md. App. 650, 668 (2014) (emphasis added).
We also stated that “[t]he tolling effect of Rule 8-202(c) does not apply to a motion for
6
Md. Rule 2-602, “Judgments not Disposing of Entire Action” states: “Except as
provided in section (b) of this Rule, an order or other form of decision, however designated,
that adjudicates fewer than all of the claims in an action (whether raised by original claim,
counterclaim, cross-claim, or third-party claim), or that adjudicates less than an entire
claim, or that adjudicates the rights and liabilities of fewer than all the parties to the action:
(1) is not a final judgment[.]”
7
At the November 8, 2022 general election, the voters of Maryland ratified a
constitutional amendment changing the name of the Court of Appeals of Maryland to the
Supreme Court of Maryland. The name change took effect on December 14, 2022. See,
also, Md. Rule 1-101.1(a) (“From and after December 14, 2022, any reference in these
Rules or, in any proceedings before any court of the Maryland Judiciary, any reference in
any statute, ordinance, or regulation applicable in Maryland to the Court of Appeals of
Maryland shall be deemed to refer to the Supreme Court of Maryland….”).
4
reconsideration of a non-appealable interlocutory order[.]” Id. at 669 (emphasis added).
Taken together, these cases clearly show that a “final judgment,” as contemplated by Rule
2-602, is unnecessary to toll the time in which to file a notice of appeal, as long as a 2-534
motion contests an appealable interlocutory order.
We are persuaded that the circuit court’s denial of Andrews’ Motion to Stay was an
appealable interlocutory order by virtue of CJP § 12-303(3)(iii). That provision states that
a party may appeal from an interlocutory order entered by a circuit court in a civil case
where the court refuses to grant an injunction. In Huertas v. Ward, 248 Md. App. 187, 207
(2020), we noted that “a request to stay a foreclosure sale, i.e., to prohibit parties from
selling a property, was a request for an injunction. Accordingly, the order was immediately
appealable to the extent that it denied his request for injunctive relief.” (Internal citations
omitted). Further, the Supreme Court of Maryland has held that, on an appeal from the
ratification of the foreclosure sale (the final judgment), one cannot litigate issues pertaining
to the stay.
[P]rior to the sale, the debtor may seek to enjoin the foreclosure sale
from proceeding by filing a motion to enjoin as provided in [the Maryland
Rules]. Should a sale occur, however, the debtor's later filing of exceptions
to the sale may challenge only procedural irregularities at the sale or the
debtor may challenge the statement of indebtedness by filing exceptions to
the auditor's statement of account.
Thomas v. Nadel, 427 Md. 441, 444 (2012) (citing Greenbriar Condo v. Brooks, 387 Md
683, 688 (2005) (explaining that, prior to the foreclosure sale, the debtor had the right to
file a motion to enjoin the sale under Rule 14-209, but that after the sale went forward, an
injunction was not permissible to overturn the sale, nor were exceptions to the sale filed
5
under Maryland Rule 14-304 appropriate to “upset retroactively a sale properly
held”), superseded by Rule as stated in Thomas v. Nadel, 427 Md. 441, 444 n.5 (2012)).
Consequently, we shall treat the denial of the motion to stay a foreclosure
proceeding as an order final in nature. Thus, Andrews’ filing of the Rule 2-534 motion
tolled the time for her to file a notice of appeal until the court docketed its order denying
her Rule 2-534 motion on August 4, 2021. Her notice of appeal filed on September 2, 2021,
was thus timely and Appeal 1018 is properly before us.
The Substitute Trustees also urge dismissal of appeal No. 1553,8 stating that it is a
“post-sale appeal seeking to challenge the denial of a Rule 14-211 motion, which is
conclusively not allowed.” (Emphasis in original). The Substitute Trustees cite Thomas,
where the Supreme Court of Maryland stated that, in a foreclosure action, following a sale
of the property, “the debtor’s later filing of exceptions to the sale may challenge only
procedural irregularities at the sale or the debtor may challenge the statement of
indebtedness by filing exceptions to the auditor’s statement of account.” 427 Md. at 444.
However, this proposition does not mean that a failure to limit an appeal to procedural
irregularities is a basis for dismissal. Rather, it is a basis for concluding that the appellant
has not asserted a substantive challenge to the ratification of the sale—and thus, to rule in
the appellee’s favor on the merits. Here, Andrews filed a timely notice of appeal contesting
8
The Substitute Trustees also argue that because we are without jurisdiction to hear
Appeal 1018, no appellant’s brief is properly before us, and we should dismiss Appeal
1553 under Rule 8-502(d) for failing to file an appellant’s brief. We need not address this
argument as we hold that Appeal 1018 is properly before us.
6
the denial of her Motion to Stay and subsequent Rule 2-534 motion. The fact that the court
ratified the sale of the house9 does not prevent us from reaching the merits of her appeal.
Therefore, Appeal 1553 also does not warrant dismissal.
II. MERITS
Andrews challenges the validity of the foreclosure proceedings. Her challenges are
grounded in her assertions that: the appellees “repeatedly failed to provide the required pre-
mediation documentation as required under the law”; all loss-mitigation options had not
been exhausted; the appellees provided affidavits containing false information; and the
court failed to recognize the “unclean hands” of the Substitute Trustees. We will address
each in turn.
1. The Circuit Court Did Not Abuse its Discretion in Concluding that
Substitute Trustees Provided Andrews the Proper Pre-Mediation
Documents
a. Parties’ Arguments:
Andrews argues that the Substitute Trustees did not submit the proper documents
detailing Andrews’ payment history prior to the parties’ scheduled mediation. As a result
of this omission Andrews asserts that the circuit court erred in not staying the foreclosure
because loss mitigation efforts were still underway. The Substitute Trustees counter that
the Office of Administrative Hearings (OAH), which conducts the mediation sessions with
9
The property was sold to U.S. Bank National Association, as successor to the
Noteholder. Because the buyer was not a bona-fide third-party purchaser, Andrews did not
need to obtain a supersedeas bond to protect her interest. See Baltrotsky v. Kugler, 395 Md.
468, 474–75 (2006).
7
an Administrative Law Judge (ALJ), held the mediation session after two prior attempts
failed because the Substitute Trustees had not provided the proper pre-mediation
documentation. The third scheduled mediation session went forward and the ALJ who was
conducting the session did not find that there were any deficiencies with the documents
that Andrews was provided. Further, Andrews had the benefit of having the lender twice
review her loan for a modification. During that process the lender provided her with several
documents that apprised her of her financial status in relation to the loan at issue. Thus,
according to the Substitute Trustees, by the date that mediation went forward, Andrews
had the information that was required under the statute. Consequently, the court did not
abuse its discretion in denying Andrews’ motion to stay on this ground.
b. Standard of Review
Under Md. Rule 14–211(a)(1), a borrower may petition for an injunction to stay a
foreclosure sale of property and for dismissal of the foreclosure action. Rule 14–211(b)(1)
provides:
(1) Denial of Motion. The court shall deny the motion, with or without
a hearing, if the court concludes from the record before it that the motion:
(A) was not timely filed and does not show good cause for excusing
non-compliance with subsection (a)(2) of this Rule;
(B) does not substantially comply with the requirements of this Rule;
or
(C) does not on its face state a valid defense to the validity of the lien
or the lien instrument or to the right of the plaintiff to foreclose in the pending
action.
8
Rule 14–211(a)(3)(B) provides that the motion shall be (1) under oath or supported by
affidavit and (2) “state with particularity the factual and legal basis of each defense” to the
validity of the lien or the right to foreclose.
Denial of a motion to stay is reviewed for abuse of discretion. Fishman v. Murphy
ex rel. Estate of Urban, 433 Md. 534, 546 (2013). As our Supreme Court has held, we will
reverse under this standard if we determine that “no reasonable person would take the view
adopted by the [trial] court[ ].” Aventis Pasteur, Inc. v. Skevofilax, 396 Md. 405, 419
(2007). We have found abuses of discretion where the trial court ruling was “clearly against
the logic and effect of facts and inferences before the court[ ] ... or when the ruling is
violative of fact and logic.” Fishman, 433 Md. at 545.
c. Analysis
In a foreclosure action in Maryland, a borrower may request loss mitigation
mediation with the secured party seeking foreclosure under Maryland Code Annotated,
Real Property (“RP”) Article § 7-105.1(j)-(l). In compliance with RP § 7-105.1(l) the OAH
notice required the lender to provide:
• Borrower’s payment history
• Correspondence log of account activities
• Separately as to each loss mitigation option considered for the borrower,
documentation of the basis for denial including:
▪ Specific data inputs and their sources
▪ An explanation of each specific factor relied upon
▪ Relevant portions of investor guidelines
▪ Property valuation, if any
9
It is undisputed that the loan servicer, PHH/NewRez (“NewRez”), submitted a one page
“Customer Account Activity Statement” as their pre-mediation documents. This document
seemingly was deficient because it:
• Failed to provide the borrower’s payment history
• Failed to contain the correspondence log of account activities
• And it failed to contain the required loss mitigation options
Andrews sent to NewRez a letter titled “Notice of Error” alerting them that she did not
have all of the necessary documents before the mediation. The record appears to confirm
that NewRez did not provide the proper pre-mediation documents to Andrews before the
September 16, 2019 mediation, because the ALJ postponed the mediation session to
October 17, 2019. According to Andrews, until NewRez responded to her Notice of Error,
there could be no foreclosure sale under federal law.10 The October 17 mediation session
10
Andrews cites to 12 C.F.R. § 1024.35(e)(3)(i)(B), part of the Real Estate
Settlement Procedures Act (RESPA), which states: “In general. A servicer must comply
with the requirements of paragraph (e)(1) of this section [which outlines responding to
notice of error]: Prior to the date of a foreclosure sale or within 30 days (excluding legal
public holidays, Saturdays, and Sundays) after the servicer receives the notice of error,
whichever is earlier, for errors asserted under paragraphs (b)(9) and (10) of this section.”
She also cites to § 1024.35(f)(2) which states: “Error asserted before foreclosure
sale. A servicer is not required to comply with the requirements of paragraphs (d) and (e)
of this section for errors asserted under paragraph (b)(9) or (10) of this section if the
servicer receives the applicable notice of an error seven or fewer days before a foreclosure
sale. For any such notice of error, a servicer shall make a good faith attempt to respond to
the borrower, orally or in writing, and either correct the error or state the reason the
servicer has determined that no error has occurred.”
10
was also postponed. But mediation went forward on the third scheduled date, December 4,
2019. Afterward, the ALJ filed a report stating that mediation resulted in no agreement.
At the conclusion of the May 11, 2021 hearing on the motion to stay, in its oral
ruling the circuit court noted that on one of the forms the ALJ submitted after the December
4 mediation session, the ALJ could have noted that NewRez had not submitted the proper
pre-mitigation documents to Andrews, but the ALJ made no such notation. On the same
form, the ALJ could also have noted that Andrews failed to provide documents needed for
mediation but, similarly, the ALJ made no such notation. The circuit court concluded that
because the ALJ did not postpone the mediation because neither the lender nor Andrews
failed to provide required documents, the mediation properly went forward. Further, the
court found that Andrews and NewRez had reviewed several potential loan modifications,
but none were accepted by NewRez. The court found that because NewRez followed the
applicable federal and state statutes before foreclosing and mediation was unsuccessful, by
virtue of Rule 14-209.1(f)(2),11 the lender could properly begin foreclosure proceedings.
Consequently, the court denied Andrews’ motion to stay.
We conclude that the circuit court did not err for several reasons. First, it does not
seem unreasonable for the court to have relied on the ALJ’s finding that NewRez and
Andrews both had the necessary documentation prior to mediation. Andrews points to no
authority in her brief or at oral argument that suggests that the circuit court was required to
11
Md. Rule 14-209.1(f)(2) provides that “[i]f the postfile mediation does not result
in an agreement, the secured party may advertise the sale, subject to the right of the
borrower to file a motion pursuant to Rule 14-211 to stay the sale and dismiss the action.”
11
undertake an independent review of the pre-mitigation documents; our research revealed
no such authority. Consequently, we determine that it was not unreasonable for the court
to have relied on the factual determinations of the ALJ, a disinterested third party. Second,
there is sufficient documentation in the record, discussed more fully in the next section of
this opinion, to suggest that Andrews did, in fact, receive the documentation required under
RP § 7-105.1(l) when NewRez was considering her separate proposals for a loan
modification in January and September 2019. The record reflects that NewRez sent
Andrews a 12-page complete account history (beginning July 2011), when it considered
her loan modification requests. The OAH’s notice to the lender required the lender to
provide the historical documentation for the loan ahead of mediation under RP § 7-105.1(l),
“if not already provided.” The record suggests that NewRez satisfied the documents
requirements with the 12-page account history it had previously provided to Andrews.
Finally, the supposed lack of documentation of which Andrews complains belies the fact
that mediation went forward when it had not on two prior occasions. On those occasions
the ALJ had determined that the documentation was missing. The ALJ made no such
finding at the time of the third and final mediation. On this record, we conclude that the
court did not abuse its discretion in denying the stay on the ground that Andrews did not
have the necessary documents prior to the December 4, 2019 mediation session.
2. The Circuit Court Did Not Err in Denying the Motion to Stay Based on
Andrews’ Claim that Her Loss-Mitigation Options Had Not Been
Exhausted
a. Parties’ Arguments
12
Andrews requested that NewRez modify her loan and it declined. Andrews’ position
is that under 12 CFR § 1024.41(i), a section of the Real Estate Settlement Procedures Act
(RESPA) that deals with loss mitigation procedures,12 NewRez was required to consider
her loan modification request because this was the first such request that Andrews had
submitted to NewRez after it took over as servicer of the loan. Substitute Trustees claim
that the application submitted and denied by NewRez on September 12, 2019 is not covered
by RESPA as the borrower only receives “one bite of the apple” for a modification covered
by RESPA. Substitute Trustees argue that Andrews had previously submitted a loan
modification to Ocwen, NewRez’s predecessor, before merging with them. Ocwen had
denied the previous loan modification request. Even so, Substitute Trustees maintain that
NewRez, in fact, considered Andrews’ modification request, giving her a “second bite at
the apple,” but deemed her unqualified because the new loan would not reduce her monthly
mortgage payment by at least $0.01.
b. Analysis
After congressional passage and President Richard Nixon’s signature, RESPA
became effective on June 20, 1974. 12 U.S.C. § 2601, et seq. provision 12 C.F.R. Later, in
2010, Congress enacted the Dodd–Frank Wall Street Reform and Consumer Protection
Act, thereby granting rule-making authority under RESPA to the Consumer Financial
Protection Bureau (CFPB). Pub.L. 111–203 (July 10, 2010), 12 USC §§ 5491, 5511, 5512,
5513; 15 USC § 1639d. Subsequently, the CFPB issued a final rule amending Regulation
12
Loss mitigation is the process in which borrowers and lenders try to create a plan
to avoid foreclosure. See hud.gov/topics/avoiding foreclosure.
13
X of RESPA, effective January 10, 2014. One of the specific provisions of Regulation X
at issue is subsection 1024.41(g), governing loss mitigation, which provides:
Prohibitions on foreclosure sale. If a borrower submits a complete loss
mitigation application after a servicer has made the first notice or filing
required by applicable law for any judicial or non-judicial foreclosure
process but more than 37 days before a foreclosure sale, a servicer shall not
move for foreclosure judgment or order of sale, or conduct a foreclosure sale.
12 C.F.R. § 1024.41(g) (2014). Additionally, 12 C.F.R. § 1024.41(i) states:
A servicer must comply with the requirements of this section for a borrower's
loss mitigation application, unless the servicer has previously complied with
the requirements of this section for a complete loss mitigation application
submitted by the borrower and the borrower has been delinquent at all times
since submitting the prior complete application.13
As Substitute Trustees correctly point out in their brief, the purpose of subsection (i) is to
“prevent[] borrowers from bringing actions for violations of loss mitigation rules if they
have already availed themselves of the loss mitigation process once.” Philips v. Wells
Fargo Bank, N.A., No.3:17-cv-00519-JAG, 2018 U.S. Dist. LEXIS 16995 at *4. See
also Trionfo v. Bank of Am., N.A., No. JFM–15–925, 2015 WL 5165415, at *4 (D. Md.
13
An official interpretation of 12 C.F.R. § 1024.41(i) states that:
Servicing transfers. Section 1024.41(i) provides that a servicer need
not comply with § 1024.41 for a subsequent loss mitigation application from
a borrower where certain conditions are met. A transferee servicer and a
transferor servicer, however, are not the same servicer. Accordingly, a
transferee servicer is required to comply with the applicable requirements of
§ 1024.41 upon receipt of a loss mitigation application from a borrower
whose servicing the transferee servicer has obtained through a servicing
transfer, even if the borrower previously received an evaluation of a complete
loss mitigation application from the transferor servicer.
As will be discussed, NewRez is not a transferee servicer of Ocwen.
14
Sept. 2, 2015), appeal dismissed, No. 15–2068 (4th Cir. Jul. 5, 2016) (observing that the
statute applies only to first-time applicants).
Andrews’ argument is that NewRez, the successor servicer, failed to properly
consider her request for a loan modification under RESPA. Specifically, she asserts that
under 12 C.F.R. § 1024.41(d) NewRez did not state the “specific reason each modification
option was denied.” Further, Andrews claims that NewRez “failed to name the purported
investor of [her] loan as required by C.F.R.§ 1024,41(g)(1).” Additionally, she raises other
RESPA violations but cites no statutory authority to support those claims.
A borrower may request loss mitigation consideration from the lender in the form
of a loan modification, but it need only be accomplished once under 12 C.F.R. § 1024.41(i).
The record developed in this case reveals that after her February 2, 2018 default, Ocwen,
her loan servicer at the time, considered Andrews’ request for a loan modification as
referenced in the multi-page account history that Ocwen provided to Andrews. Neither
party’s appendix or the record extract has a copy of Ocwen’s denial letter to Andrews, but
in their briefs both parties acknowledge that Ocwen considered and denied Andrews’ loan
modification request in January of 2019. As part of Ocwen’s consideration of her loss
mitigation options, Ocwen sent to Andrews her account payment history, a 12-page
spreadsheet which included among 16 columns of entries, the loan’s principal and escrow
balance, what payments were received from Andrews and when they were received, what
interest was applied, in addition to other information. This document provided Andrews
with ample evidence of her “payment history” and a “log of account activities” months
before the December 4, 2019 mediation.
15
The record also shows that on May 31, 2019 Ocwen merged “with and into” PHH,
the surviving corporation being “PHH Mortgage Corporation.” NewRez is a subsidiary of
PHH.14 The question to be considered is whether NewRez is a service transferee under
RESPA and as a separate entity from Ocwen was obligated to provide loss mitigation to
Andrews. Mortgage servicing transfers are addressed in 12 C.F.R. § 1024.33(b)(2), which
states:
Certain transfers excluded.
(i) The following transfers are not assignments, sales, or transfers of
mortgage loan servicing for purposes of this section if there is no
change in the payee, address to which payment must be delivered,
account number, or amount of payment due:
…
(B) A transfer that results from mergers or acquisitions of servicers
or subservicers.
(Emphasis supplied). Consequently, Ocwen and NewRez are not different loan servicers
under RESPA requiring NewRez to undertake a second round of loss mitigation under 12
C.F.R. § 1024.41(i), as Andrews asserts.
Additionally, there are documents in the record supplied by both parties that show
that NewRez again considered Andrews for a loan modification in September 2019 but
“New Residential Investment Corporation has reached an agreement with Ocwen
14
Financial Corporation to transfer the subservicing of agency loans currently subserviced
by PHH Mortgage Corporation, a subsidiary of Ocwen, to its NewRez LLC subsidiary.
The transaction will involve PHH transferring the subservicing of approximately
$41.8 billion unpaid principal balance (UPB) of agency MSRs, representing approximately
310,000 loans. Transfers are expected to occur during the second and third quarters of this
year. After the transfers are completed, New Residential will maintain its subservicing
relationship with Ocwen related to the portfolio of non-agency loans currently subserviced
by PHH.” https://nationalmortgageprofessional.com/news/73981/residential-transfers-
agency-subservicing
16
determined that she was ineligible. NewRez’s October 30, 2019 letter to Andrews confirms
that it denied her request, in short, because the amount of the total modification would have
been greater than 25% of the original loan. The October 30 letter explains in detail why
this was the case by citing figures Andrews owed for principal, interest, and escrow
expenses for the defaulted loan and comparing what those same figures would be for the
new loan. As for Andrews’ claim that this letter was deficient, in that it did not sufficiently
apprise her of why her loan modification request was denied, we disagree. We
independently review NewRez’s denial letter and conclude that it explains in detail why
the modification was denied, as we note above. As for the other purported RESPA
violations Andrews raises in her brief, Andrews failed to assert any RESPA violations in
her Motion to Stay, which she was required to do. See Md. Rule 14-211(a)(3)(B): “A
motion to stay and dismiss shall: state with particularity the factual and legal basis of each
defense that the moving party has to the validity of the lien or the lien instrument or to the
right of the plaintiff to foreclose in the pending action[.]” Because Andrews failed to
include this defense nor did she argue it in the circuit court she is precluded here from
raising it on appeal. Rule 8-131(c) (“Ordinarily, the appellate court will not decide any
other issue unless it plainly appears by the record to have been raised in or decided by the
trial court”).
We conclude that Andrews was twice considered for a loan modification under
RESPA when the statute required the servicer to provide such loss mitigation only once.
Both modification requests were declined primarily because they would have resulted in a
greater than 25% increase in the amount of the original loan, placing the modified loan
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outside the servicer’s guidelines. Accordingly, we determine that loss mitigation was
concluded by October 30, 2019. We, therefore, hold that the circuit court did not err in
denying the motion to stay based on the ground that loss mitigation was supposedly on-
going.
3. The Circuit Court Did Not Err in Denying the Motion to Stay Based on
Andrews’ Claim that the Order to Docket the Foreclosure was Supported
by False Affidavits
a. Parties’ Arguments
Andrews contends that under Md. Rule 14-207(b)(2), an Order to Docket (OTD)
must have an affidavit with the amount of debt owed. The affidavits in this OTD did not
comply with Rule 14-207(b)(2) in Andrews’ estimation because they did not show fees
that the previous servicer Ocwen assessed against Andrews’ account and the claimed
principal debt does not align with the account history provided by Ocwen. The Substitute
Trustees assert that Andrews is complaining that the affidavits do not contain prior service
fees and property inspection and valuation fees that Ocwen previously imposed. If NewRez
has chosen to not charge Andrews certain fees, then that is NewRez’s prerogative and
Andrews cannot be heard to complain.
b. Analysis
We agree with Substitute Trustees in that Andrews cites no authority prohibiting a
creditor or loan servicer from choosing not to collect certain fees owed. If NewRez chose
not to collect the fees previously assessed, then it seems reasonable to us that this decision
falls squarely within the discretion of the servicer. Further, declining to collect such fees
hardly constitutes a deception, which, requires proof
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(1) that the defendant made a false representation to the plaintiff,
(2) that its falsity was either known to the defendant or that the representation
was made with reckless indifference as to its truth,
(3) that the misrepresentation was made for the purpose of defrauding the
plaintiff,
(4) that the plaintiff relied on the misrepresentation and had the right to rely
on it, and
(5) that the plaintiff suffered compensable injury resulting from the
misrepresentation.
Nails v. S & R, Inc., 334 Md. 398, 415 (1994); Kantsevoy v. LumenR LLC, 301 F. Supp. 3d
577, 601 (D. Md. 2018). Here, there is nothing false or deceptive about NewRez opting not
to collect the fees from Andrews.
As to the legitimacy of the claimed balance of her loan, Andrews suggests that her
mortgage balance should be based on an Internal Revenue Service 1099 form she had
received some time after she was in default. We agree with Substitute Trustees that
Andrews’ payment obligations are governed by RP §§ 5-10315 and 5-10416, and by the
Note, Deed of Trust, and any modifications to which the parties agreed. As the record
demonstrates, these were documents that she had in her possession. We are unpersuaded
that an unsigned mortgage interest statement should be dispositive of her loan balance.
4. The Circuit Court Properly Denied the Motion to Stay Based on Andrews’
Assertion that Substitute Trustees Had Unclean Hands
15
RP § 5-103 provides that “No corporeal estate, leasehold or freehold, or
incorporeal interest in land may be assigned, granted, or surrendered, unless it is in writing
signed by the party assigning, granting, or surrendering it, or his agent lawfully authorized
by writing, or by act and operation of law.”
16
RP § 5-104 provides that “No action may be brought on any contract for the sale
or disposition of land or of any interest in or concerning land unless the contract on which
the action is brought, or some memorandum or note of it, is in writing and signed by the
party to be charged or some other person lawfully authorized by him.”
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a. Parties’ Arguments
Andrews submits that foreclosure is an equitable procedure, and the Substitute
Trustees must demonstrate that the foreclosure has not been marred by fraudulent, illegal,
or inequitable conduct. Mitchell v. Yacko, 232 Md. App. 624 (2017). She maintains that
Substitute Trustees violated RESPA by denying Andrews for a loan modification even
though she claims she qualifies for such a modification. Additionally, as previously argued,
Andrews asserts that Substitute Trustees provided false information in the OTD affidavits
and failed to provide the required pre-mediation documentation. The Substitute Trustees
argue that they and NewRez have done nothing fraudulent or illegal in proceeding to
foreclosure in this case.
b. Analysis
The basis of Andrews’ allegations of unclean hands rests on her proving the other
assertions in this appeal. As we have discussed, none of those arguments has merit. As a
result, her cumulative assertion that Substitute Trustees have unclean hands must fail as
well. Further, Andrews’ reliance on Mitchell is misplaced. Andrews cites Mitchell for the
broad proposition that courts should not “rubber-stamp” foreclosure proceedings, because
of the devastating effects an invalid foreclosure proceeding would have on the homeowner.
We do not disagree with this general proposition, but, significantly, Mitchell concerned
allegations of forgery at the time the deed of trust originated. 232 Md. App. at 627.
Andrews has not proven fraud, forgery, or other illegality against NewRez. Indeed,
Andrews neither disputes that she owes the debt nor that she is in default. Essentially, she
asserts that she was entitled to a loan modification on terms favorable to her. As discussed,
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Andrews had the benefit of the loan servicer considering two loan modifications. Because
of her credit history, the principal amount of the debt, and interest she owed, NewRez
concluded that Andrews posed too great a financial risk for a loan modification.
Accordingly, on this record, we cannot say that the circuit court abused its discretion in
denying Andrews’ motion to stay the foreclosure based on her assertion that the Substitute
Trustees had unclean hands.
JUDGMENT OF THE CIRCUIT COURT
FOR PRINCE GEORGE’S COUNTY
AFFIRMED. APPELLANT TO PAY THE
COSTS.
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