FELTON R. HOOD, et ux.
JOHN E. DRISCOLL, III, et al., SUBSTITUTE TRUSTEES
from the Circuit Court for Harford County. William O. Carr,
BY: Richard I. Chaifetz of Columbia, MD. FOR APPELLANT
BY: Robert H. Hillman (Kimberly L. Britt, Samuel I. White, PC
on the brief) all of Rockville, MD. FOR APPELLEE
BEFORE: Woodward, Leahy, Wilner, Alan M. (Retired, Specially
Assigned), JJ. Opinion by Wilner, J.
Md.App. 691] Wilner, J.
2007, appellants executed a note in the amount of $345,000
and, as security for the note, a deed of trust on their home
in Harford County. The note called for interest on the loan
at the rate of 6.805 percent. Appellants defaulted on their
obligations under the note and deed of trust, and, in July
[227 Md.App. 692] 2013, the substitute trustees under the
deed of trust instituted foreclosure proceedings in the
Circuit Court for Harford County. Appellants were able to
forestall a sale of the property for two-and-a-half years,
first by requesting mediation, which failed, and then seeking
protection from the U.S. Bankruptcy Court, which was partly
successful. The Bankruptcy Court discharged them from the
underlying debt but permitted the sale to proceed.
sale was conducted on January 21, 2015. In the Notice of Sale
sent to appellants and published in two newspapers of general
circulation in the county earlier that month, the trustees
stated, as one of the terms of sale, that interest would
accrue on any unpaid part of the purchase price at the rate
of 6.805 percent - the same rate as provided in the note -
from the date of sale to the date of settlement. No objection
was made to that provision by appellants prior to the sale.
The property was sold to Federal National Mortgage
Association, for $490,005, that being the highest bid and the
full amount of the debt that had been owed by appellants and
discharged in bankruptcy. In his Report of Sale, filed on
February 18, 2015, the substitute trustee affirmed that the
sale was fairly made and that the property brought a fair
price. The purchaser filed the required affidavit that no one
was discouraged from bidding.
seeds of this appeal were planted on March 20, 2015, when
appellants filed exceptions to the foreclosure sale. The sole
ground raised by them was that the interest rate on the
purchase price was " excessive." With no supporting
documentation, but with a request for a hearing, they claimed
that " [i]t is well known and public knowledge that the
current prevailing interest rate on mortgage loans is in the
vicinity of 4 percent and the Court may take judicial notice
of this fact under Rule 5-201(b) of the Maryland Rules."
They contended that, in the absence of payment terms set in
the lien instrument, terms set by the trustee must be
reasonable and that it was not reasonable to require the
purchaser to pay interest on the purchase price at the rate
of 6.805 percent when the prevailing rate for mortgage loans
was only about four percent. [227 Md.App. 693] They urged
that " it is quite likely that," absent the higher
rate " the price could have been higher," and thus
" a possibility that there could have been sufficient
proceeds to yield some funds to Defendants."
substitute trustee responded that (1) there was nothing
improper about requiring the purchaser to pay the same rate
appellants had agreed to pay, (2) if there was anything
improper, it should have been raised in a pre-sale motion to
enjoin the sale, (3) it is not a proper ground for exceptions
designed to upset a sale, and (4) appellants were not
prejudiced in any event, as charging a lesser rate would have
reduced the amount paid for the property.
court held a hearing on the exceptions, which mostly was
limited to argument. The one item of evidence was in the form
of a stipulation that, if called to testify, an expert
retained by appellants would opine that the 6.805 rate "
was too high given the current market conditions and that a
lower market based rate would yield a higher sale price and
perhaps produced more qualified buyers." The proffer did
not include any backup data for that opinion. The court
accepted the proffered testimony, not as being persuasive but
merely that the expert would so testify. The court listened
to argument and, three weeks later, filed a Memorandum
Opinion and Order denying the exceptions and ratifying the
sale. The court assigned three reasons for ruling as it did:
first, that the issues raised by appellants " were not
filed in a timely fashion; " second, that those issues
" are inappropriately raised at this stage of the
proceeding; " and third, assuming that appellants'
challenge to the sale was timely raised, it was
legally insufficient to deny the trustee's request to
ratify the sale.
believe that the court erred in its first two conclusions but
not in the third, which is dispositive.