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Granados v. Nadel

Court of Special Appeals of Maryland

December 16, 2014


Page 922

Appeal from the Circuit Court for Prince George's County. Thomas P. Smith, Judge.

Argued by: Michael Rynd (Daniel Karp, Karpinski, Colaresi & Karp on the brief) all of Baltimore, MD for Appellant.

Argued by: Bizhan Beiramee (Alexander R. Green, McGinnis, Wutscher Beiramee LLP of Bethesda, MD and Jeffrey Nadel (Scott Nadel, Law Offices of Jeffrey Nadel of Calverton, MD) all on the brief for Appellee.

Kehoe, Arthur, Leahy, JJ.


Page 923

[220 Md.App. 486] Leahy, J.

Foreclosures are a constant reminder of the not-so-distant financial crisis and the significantly more recent economic downturn known as the Great Recession. In an effort to stem the surge in foreclosures in Maryland, the General Assembly enacted laws obligating lenders to give borrowers information regarding opportunities to avoid foreclosure. This case interprets the legislatively prescribed notice requirements that lenders must send to borrowers before initiating a foreclosure action.

In 2009, Appellant, Ramos Granados, defaulted on a loan secured by his principal residence. Mr. Granados endeavored to participate in loan modification, but after he made a few late payments, the lender filed a notice of intent to foreclose (" Notice" or " NOI" ). Shortly after filing a foreclosure action, the lender dismissed the case without prejudice. Almost one year after the NOI was issued, Jeffrey Nadel and Scott Nadel, as substitute trustees for the current noteholder (" Appellees," " Trustees," or " lender" ),[1] filed a second foreclosure action. The Trustees did not send Mr. Granados a new NOI, relying instead on the NOI issued

Page 924

prior to the first foreclosure action, and prior to intervening changes in the statute governing notice requirements for residential foreclosures.

During the second foreclosure action Mr. Granados filed several motions to dismiss, followed by exceptions to the foreclosure sale, in which he asserted that the Trustees failed to comply with the notice requirements of Maryland Code (1974, 2010 Repl. Vol., 2010 Supp.), Real Property Article (" RP" ), § 7-105.1[2] [220 Md.App. 487] and Maryland Rule 14-205. The Circuit Court for Prince George's County denied the motions and ratified the sale. In his timely appeal, Mr. Granados raises two issues for our review, which we have rephrased for clarity:

1. Did the circuit court err in denying Mr. Granados' motions to dismiss the foreclosure action where the Trustees docketed the action relying on a Notice of Intent to Foreclose issued prior to applicable changes to the statute governing notice requirements in a prior foreclosure action that was dismissed?
2. Did the circuit court err in denying Mr. Granados' request for a hearing relative to his motion excepting to ratification of foreclosure sale pursuant to Maryland Rule 2-311?

We hold that once the Trustees dismissed the first foreclosure action, they were obligated to send Mr. Granados a new Notice containing the particularized information and documents prescribed by law before filing a second foreclosure action. Therefore, we reverse the circuit court on the first issue and do not reach the second.


Ramon Granados obtained a construction loan on November 20, 2006, in an amount of $688,950 from FNMC, a division of National City Bank. The loan was evidenced by a note and secured by a deed of trust recorded against real property in the city of Bowie in Prince George's County, Maryland (the " Property" or the " Bowie Property" ). Under the deed of trust, Mr. Granados was to use the Property as his principal residence within 60 days of obtaining the loan and for at least one year thereafter unless otherwise agreed by the parties in writing.

[220 Md.App. 488] First Modification Trial Plan

On December 31, 2008, PNC Bank, National Association (" PNC" ) acquired National City Bank and the Granados loan. Select Portfolio Servicing, Inc. (" SPS" ) was a loan servicer for PNC. A loan servicer performs services for the mortgage note holder or lender, including collecting payments, modifying terms of the mortgage, releasing liens, paying property insurance and taxes, and initiating foreclosure proceedings. See Md. Code (1980, 2011 Repl. Vol., 2014 Supp.), Fin. Inst. Art. § 11-601(j); Deutsche Bank Nat. Trust Co. v. Brock, 430 Md. 714, 727-31, 63 A.3d 40 (2013).

Mr. Granados defaulted on the loan on May 2, 2009.[3] On September 25, 2009, SPS sent Mr. Granados an application for his first Trial Period Plan under the Home Affordable Modification Program (" HAMP" ).[4] The Plan set up three

Page 925

payments each in an amount of $1,730.64 due on November 1, 2009, December 1, 2009, and January 1, 2010. If Mr. Granados complied with the terms of the Plan, under which " TIME WAS OF THE ESSENCE," [5] the lender would send him a [220 Md.App. 489] HAMP Agreement to modify the loan documents. Although at the time Mr. Granados had not yet received a notice of intent to foreclose, and no foreclosure action had been filed, the SPS application form also contained a provision stating that the lender would suspend any scheduled foreclosure sale if borrower met the obligations of the Plan. Significantly, the form also advised, " but any foreclosure action will not be dismissed and may be immediately resumed from the point at which it was suspended if this Plan terminates." (Emphasis added).

Thus conditioned on the premise that any pending foreclosure action would not be dismissed, the form advised that no new " notice of default, notice of intent to accelerate, notice of acceleration, or similar notice will be necessary to continue the foreclosure action, all rights to such notices being hereby waived to the extent permitted by applicable law." (Emphasis added).

Mr. Granados made payments in the correct amounts on November 24, 2009 (23 days late), December 28, 2009 (27 days late), and January 23, 2010 (22 days late). Mr. Granados made a fourth payment on February 26, 2010. On March 5, 2010, Mr. Granados received a letter from SPS, Inc. stating that SPS did not apply a check it received in an amount of $1,730.64, because " [the funds] were less than the amount that we previously advised you was necessary to stop your foreclosure." The letter did not explain why SPS considered the payment to be an incorrect amount or why it accepted three late payments but not this one. The letter advised Mr. Granados that, " if you send us $60,422.42 by 03/19/2010 we will credit the payment to your account, stop your foreclosure and set you up on a forbearance plan to accept future payments." (Emphasis added).

[220 Md.App. 490] The Notice of Intent to Foreclose

On March 10, 2010, a Notice of Intent to Foreclose was sent to Mr. Granados pursuant to Maryland Code (1973, 2003 Repl. Vol., 2008 Supp.), RP § 7-105.1(b)(1), and Code of Maryland Regulations (" COMAR" ) The NOI announced

Page 926

that Mr. Granados was in default of his Loan as of May 2, 2009, and that the most recent loan payment, received on January 11, 2010,[6] was applied to the April 4, 2009 period. The NOI specified the new amount required to cure the default was $66,159.75. It also warned that, " [if] you do not bring your loan current and cure your default or negotiate a resolution with us, we may file a foreclosure action 45 days after this Notice is sent."

First Foreclosure Action

On April 8, 2010, SPS sent Mr. Granados a second trial period plan. The second plan required trial period payments of $2,133.64 by May 1, June 1, and July 1, 2010. Mr. Granados made a single payment of $2,133.64 on April 30, 2010, but that same day one day before the first payment was due under the second plan Bierman Geesing & Ward LLC, on behalf of the substitute trustees on the deed of trust at the time, filed the first foreclosure action. Bierman Geesing & Ward LLC later voluntarily dismissed this action without prejudice through an order entered by the circuit court on July 19, 2010. Geesing v. Granados, No. CAE10-13975, Circuit Court for Prince George's County.

Meanwhile, on May 10, 2010, Mr. Granados received yet another letter from SPS stating that SPS did not apply the [220 Md.App. 491] check it received from him in an amount of $2,133.64. True to form, the letter provided the same reason for not crediting Mr. Granados' check as in the previous letter: " [the funds] were less than the amount that we previously advised you was necessary to stop your foreclosure."

The Granados Loan was transferred in August 2010 to Wells Fargo Bank, N.A., Trustee to RMAC Pass-Through Trust, Series 2010-7T (" Wells Fargo" ). Quantum Servicing Corporation (" Quantum" ) assumed responsibility for servicing the Loan.[7] SPS sent Mr. Granados a letter dated September 13, 2010, notifying him that servicing of the Loan was being transferred to Quantum and that the last date to contact or make payments to SPS was September 29, 2010. The letter explained that after September 29, 2010, all future questions about the loan should be directed to Quantum.

The General Assembly Acts to Aid Distressed Homeowners

The General Assembly first addressed the foreclosure crisis in 2008 with the passage of Senate Bill 216 and House Bill 365, both signed by Governor O'Malley and enacted as Chapters 1 and 2, Laws of Maryland 2008. This emergency legislation was prompted ...

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