Filed March 26, 2007—Opinion by Judge Robert A. Gordon
Debtor, who had a Chapter 13 case dismissed within the preceding 1-year period, moved to extend the automatic stay in her current Chapter 13 case, after the expiration of the 30-day post-petition period. After an initial hearing, the Debtor filed a motion for declaratory judgment as to the extent of the termination of the stay under Section 362(c)(3)(A) and sought imposition of a stay under Section 105(a). A secured creditor, holder of a deed of trust on Debtor’s residence, objected to both motions, arguing that the automatic stay under Section 362(a) had expired in toto by operation of law. The Bankruptcy Court held that: (1) the automatic stay terminated by operation of law on the 30th day post-petition under Section 362(c)(3)(A), (2) an untimely filed motion cannot serve to reimpose the automatic stay under Section 362(c)(3)(B), (3) the termination of the stay under Section 362(c)(3)(A) was limited in scope and the stay, while terminating as to the Debtor, did not terminate as to property of the estate, and (4) the alternative relief requested by Debtor under Section 105(a) appeared unnecessary in light of the Court’s ruling.
The devision is available in PDF.
Showing posts with label foreclosure. Show all posts
Showing posts with label foreclosure. Show all posts
Thursday, March 29, 2007
Wednesday, March 21, 2007
In Re: Marnitta L. King (King v. Wells Fargo Bank, N.A.) (U.S. Bankruptcy Court)
Filed March 20, 2007. Memorandum Opinion by Judge Thomas J. Catliota.
Marnitta L. King (the "Debtor") is a joint owner of the real property located at 5015 Cumberland Street, Capitol Heights, Maryland (the "Property"). Wells Fargo Bank, N.A. ("Wells Fargo") is a secured creditor by virtue of a promissory note, repayment of which is secured by a deed of trust duly recorded among the land records of Prince George's County. There was no dispute that both the note and the deed of trust were executed by the Debtor and the other joint owner (the "Codebtor").
The Debtor filed the instant bankruptcy case seeking relief under chapter 13 of the United States Bankruptcy Code (the "Code") on September 15, 2006, intending to stop a foreclosure sale of the Property scheduled for later that same day. The Debtor alerted Wells Fargo of the bankruptcy filing but Wells Fargo indicated that they would not stop the foreclosure sale because the Debtor had filed two previous bankruptcy cases within a one year period (both cases having been dismissed) and, consequently, there was no automatic stay by virtue of Section 362(c)(4)(A)(i) of the Code. The foreclosure sale was held, at which Wells Fargo was the successful bidder.
The Debtor subsequently filed a Motion to Set Aside Sell [sic], asserting that the foreclosure sale was held in violation of the codebtor stay of Section 1301(a) of the Code, which barred Wells Fargo from proceeding with a post-petition foreclosure sale even though the automatic stay did not arise as to the Debtor pursuant to Section 362(c)(4)(A)(i). Wells Fargo argued that the "vitality of the codebtor stay is at the mercy of the status of the automatic stay."
The Court held that the terms of Section 362(c)(4)(A) are unambiguous in that only the automatic stay of Section 362(a) is prevented from going into effect "when the factual predicate enumerated in Section 362(c)(4) exists. Section 362(c)(4)(A)(i) does not address the applicability of the codebtor stay that arises under Section 1301(a), and it certainly does not provide that the codebtor stay of Section 1301 does not come into effect if the circumstances of Section 362(c)(4) are met." Further, the Court found that, "Nowhere in Section 1301(a) is the codebtor stay limited, qualified, or effected by Section 362(c)(4)." The Court concluded that Wells Fargo's "foreclosure sale was in violation of the codebtor stay and is void."
This opinion is available in PDF.
Marnitta L. King (the "Debtor") is a joint owner of the real property located at 5015 Cumberland Street, Capitol Heights, Maryland (the "Property"). Wells Fargo Bank, N.A. ("Wells Fargo") is a secured creditor by virtue of a promissory note, repayment of which is secured by a deed of trust duly recorded among the land records of Prince George's County. There was no dispute that both the note and the deed of trust were executed by the Debtor and the other joint owner (the "Codebtor").
The Debtor filed the instant bankruptcy case seeking relief under chapter 13 of the United States Bankruptcy Code (the "Code") on September 15, 2006, intending to stop a foreclosure sale of the Property scheduled for later that same day. The Debtor alerted Wells Fargo of the bankruptcy filing but Wells Fargo indicated that they would not stop the foreclosure sale because the Debtor had filed two previous bankruptcy cases within a one year period (both cases having been dismissed) and, consequently, there was no automatic stay by virtue of Section 362(c)(4)(A)(i) of the Code. The foreclosure sale was held, at which Wells Fargo was the successful bidder.
The Debtor subsequently filed a Motion to Set Aside Sell [sic], asserting that the foreclosure sale was held in violation of the codebtor stay of Section 1301(a) of the Code, which barred Wells Fargo from proceeding with a post-petition foreclosure sale even though the automatic stay did not arise as to the Debtor pursuant to Section 362(c)(4)(A)(i). Wells Fargo argued that the "vitality of the codebtor stay is at the mercy of the status of the automatic stay."
The Court held that the terms of Section 362(c)(4)(A) are unambiguous in that only the automatic stay of Section 362(a) is prevented from going into effect "when the factual predicate enumerated in Section 362(c)(4) exists. Section 362(c)(4)(A)(i) does not address the applicability of the codebtor stay that arises under Section 1301(a), and it certainly does not provide that the codebtor stay of Section 1301 does not come into effect if the circumstances of Section 362(c)(4) are met." Further, the Court found that, "Nowhere in Section 1301(a) is the codebtor stay limited, qualified, or effected by Section 362(c)(4)." The Court concluded that Wells Fargo's "foreclosure sale was in violation of the codebtor stay and is void."
This opinion is available in PDF.
Wednesday, March 14, 2007
Wells Fargo Home Mortgage, Inc. v. Neal (Ct. of Appeals)
Filed: March 13, 2007. Opinion by Judge Glenn T. Harrell, Jr.
The question on appeal was whether a term in a deed of trust generically alluding to HUD regulations limiting the circumstances in which a mortgagee may accelerate and foreclose on an FHA-insured mortgage may be invoked by the mortgagor to enjoin foreclosure.
The Court held that because foreclosure is an equitable remedy, a mortgagee seeking foreclosure is subject to being enjoined from foreclosing by a mortgagor alleging violations of the HUD regulations governing foreclosure. A mortgagor bears the burden of proving that a mortgagee failed to comply with applicable HUD regulations such that he or she is entitled to an injunction.
The case began when the mortgagee initiated foreclosure proceedings. The foreclosure was stayed when the mortgagor filed a separate complaint alleging that the mortgagee had not pursued processes mandated by HUD regulations and designed to prevent foreclosure and mitigate losses. The trial court disposed of the mortgagor's claim on summary judgment, ruling that the HUD regulations were intended for the benefit of HUD enforcement of the FHA mortgage insurance program and did not grant a private cause of action for borrowers.
The mortgagor appealed to the Court of Special Appeals, which vacated the summary judgment and remanded the matter for further proceedings. That opinion is available in PDF format. Although the CSA agreed that the HUD regulations did not afford a private right of action, it opined that private parties may be bound by laws specifically incorporated into contracts executed between them. Therefore, the CSA remanded the case for determination whether the parties had bargained for the provision alluding to the HUD regulations.
The Court of Appeals reversed, concluding that the parties could not have bargained for the term at issue. The substantive provisions of the form deed were not negotiated by either party. Authority presented by the mortgagor even suggested that HUD did not contemplate its regulations to support affirmative state law claims by aggrieved mortgagors.
On the other hand, the Court held, "ample authority" suggests that alleged violations of the regulations may be asserted defensively to halt a foreclosure action. The Court held that because foreclosure is an equitable remedy, a mortgagee seeking foreclosure coming to the court with “unclean hands” is subject to being enjoined from foreclosing by a mortgagor alleging violations of the HUD regulations governing foreclosure. The mortgagor bears the burden of proving that a mortgagee failed to comply with applicable HUD regulations such that he or she is entitled to an injunction.
The opinion is available in PDF format.
The question on appeal was whether a term in a deed of trust generically alluding to HUD regulations limiting the circumstances in which a mortgagee may accelerate and foreclose on an FHA-insured mortgage may be invoked by the mortgagor to enjoin foreclosure.
The Court held that because foreclosure is an equitable remedy, a mortgagee seeking foreclosure is subject to being enjoined from foreclosing by a mortgagor alleging violations of the HUD regulations governing foreclosure. A mortgagor bears the burden of proving that a mortgagee failed to comply with applicable HUD regulations such that he or she is entitled to an injunction.
The case began when the mortgagee initiated foreclosure proceedings. The foreclosure was stayed when the mortgagor filed a separate complaint alleging that the mortgagee had not pursued processes mandated by HUD regulations and designed to prevent foreclosure and mitigate losses. The trial court disposed of the mortgagor's claim on summary judgment, ruling that the HUD regulations were intended for the benefit of HUD enforcement of the FHA mortgage insurance program and did not grant a private cause of action for borrowers.
The mortgagor appealed to the Court of Special Appeals, which vacated the summary judgment and remanded the matter for further proceedings. That opinion is available in PDF format. Although the CSA agreed that the HUD regulations did not afford a private right of action, it opined that private parties may be bound by laws specifically incorporated into contracts executed between them. Therefore, the CSA remanded the case for determination whether the parties had bargained for the provision alluding to the HUD regulations.
The Court of Appeals reversed, concluding that the parties could not have bargained for the term at issue. The substantive provisions of the form deed were not negotiated by either party. Authority presented by the mortgagor even suggested that HUD did not contemplate its regulations to support affirmative state law claims by aggrieved mortgagors.
On the other hand, the Court held, "ample authority" suggests that alleged violations of the regulations may be asserted defensively to halt a foreclosure action. The Court held that because foreclosure is an equitable remedy, a mortgagee seeking foreclosure coming to the court with “unclean hands” is subject to being enjoined from foreclosing by a mortgagor alleging violations of the HUD regulations governing foreclosure. The mortgagor bears the burden of proving that a mortgagee failed to comply with applicable HUD regulations such that he or she is entitled to an injunction.
The opinion is available in PDF format.
Tuesday, January 9, 2007
Legacy Funding LLC v. Cohn (Ct. of Appeals)
Decided January 9, 2007 - Opinion by Judge Alan M. Wilner.
In each of these three consolidated cases, Appellant, Legacy Funding LLC, purchased owner occupied residential real property ("Property") at foreclosure. The sales were ratified, and some time thereafter, Legacy paid the funds and otherwise complied with the terms of the sale. The funds received at the sale, after payment of proper expenses, resulted in a surplus, which ordinarily would go to the borrower. After it had complied with the terms of the sale, Legacy moved for possession of the Property. Legacy then sought payment from the excess proceeds for the reasonable rental value of the property during the time the owner continued to live on the property dating back to the time the sale had been ratified. The Circuit Court granted the motions for possession, but denied the motions for a portion of the surplus funds.
Held: The Court noted that the foreclosure action was the proper venue to raise the issues Legacy raised. It then held that the elements for non-statutory wrongful detainer theory are: "(1) [claimant] was lawfully entitled to possession, (2) [claimant] demanded possession following its entitlement to do so, and (3) the possession was wrongfully denied." (This is in contrast to a claim for income actually received from the real property, where upon payment of the sales price, the purchaser is "automatically entitled to rents and profits accruing from the property after the date of the sale.") The court reiterated its opinion in Empire v. Hardy, 386 Md. 628, 873 A.2d 1187 (2005), that a "purchaser at a foreclosure sale is not actually entitled to possession [the first element of wrongful detainer] until the purchase price is paid and, through delivery of a deed of conveyance, legal title passes." (However, the Court noted a court of equity may, in its discretion, grant possession upon ratification and before the purchase price is paid.) Because in this case, Legacy was not entitled to possession until after it had paid the purchase price, its claim for wrongful detainer could only arise after that payment was made.
The Court noted that there is also a distinction in calculating damages as between income producing properties and residential properties. The damages for a claim based on income producing property is the "rents and profits accruing from the property after the date of sale." On the other hand, a claim for wrongful detainer is in the nature of an action for trespass. The damages for such an action are based on the injury to the claimant, not the benefit derived by the defendant, and are "'usually measured by a reasonable rent for the land wrongfully occupied.'"
Having determined when Legacy was lawfully entitled to possession of the Property, the Court remanded the case back to the Circuit Court for a determination as to when Legacy demanded possession and when, if at all, the demand was rejected.
The full opinion is available in PDF
In each of these three consolidated cases, Appellant, Legacy Funding LLC, purchased owner occupied residential real property ("Property") at foreclosure. The sales were ratified, and some time thereafter, Legacy paid the funds and otherwise complied with the terms of the sale. The funds received at the sale, after payment of proper expenses, resulted in a surplus, which ordinarily would go to the borrower. After it had complied with the terms of the sale, Legacy moved for possession of the Property. Legacy then sought payment from the excess proceeds for the reasonable rental value of the property during the time the owner continued to live on the property dating back to the time the sale had been ratified. The Circuit Court granted the motions for possession, but denied the motions for a portion of the surplus funds.
Held: The Court noted that the foreclosure action was the proper venue to raise the issues Legacy raised. It then held that the elements for non-statutory wrongful detainer theory are: "(1) [claimant] was lawfully entitled to possession, (2) [claimant] demanded possession following its entitlement to do so, and (3) the possession was wrongfully denied." (This is in contrast to a claim for income actually received from the real property, where upon payment of the sales price, the purchaser is "automatically entitled to rents and profits accruing from the property after the date of the sale.") The court reiterated its opinion in Empire v. Hardy, 386 Md. 628, 873 A.2d 1187 (2005), that a "purchaser at a foreclosure sale is not actually entitled to possession [the first element of wrongful detainer] until the purchase price is paid and, through delivery of a deed of conveyance, legal title passes." (However, the Court noted a court of equity may, in its discretion, grant possession upon ratification and before the purchase price is paid.) Because in this case, Legacy was not entitled to possession until after it had paid the purchase price, its claim for wrongful detainer could only arise after that payment was made.
The Court noted that there is also a distinction in calculating damages as between income producing properties and residential properties. The damages for a claim based on income producing property is the "rents and profits accruing from the property after the date of sale." On the other hand, a claim for wrongful detainer is in the nature of an action for trespass. The damages for such an action are based on the injury to the claimant, not the benefit derived by the defendant, and are "'usually measured by a reasonable rent for the land wrongfully occupied.'"
Having determined when Legacy was lawfully entitled to possession of the Property, the Court remanded the case back to the Circuit Court for a determination as to when Legacy demanded possession and when, if at all, the demand was rejected.
The full opinion is available in PDF
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