BERGER, J.
This appeal arises out of an order of the Circuit Court for Prince George's County denying exceptions to a foreclosure sale filed by Michelle Hobby ("Hobby"). On April 13, 2009, Hobby refinanced her residence with a loan obtained from Freedom Mortgage Corporation ("Freedom") that was secured by a deed of trust on the property. Hobby defaulted on the mortgage and the substitute trustees
For the reasons that follow, we affirm the judgment of the Circuit Court for Prince George's County.
On April 13, 2009, Hobby refinanced her home with a loan from Freedom in the amount of $469,947. Freedom secured its loan by way of a deed of trust on Hobby's property. A few months later, Hobby defaulted on the loan due to her failure to remit several required payments to Freedom. Thereafter, Hobby requested a loan modification from Freedom. Freedom denied the request to modify the loan because the deed of trust had not been properly recorded. Freedom subsequently initiated a quiet title action which established the deed of trust as a valid and enforceable first lien against Hobby's property.
A representative of Freedom
On October 29, 2010, Freedom sent Hobby a notice of intent to foreclose which, pursuant to § 7-105.1(c) of the Real Property Article of the Maryland Code, was accompanied by a loss mitigation application.
On August 28, 2012, Hobby filed a Chapter 7 Bankruptcy Petition which automatically stayed the substitute trustees' foreclosure proceedings. At Freedom's request, however, the bankruptcy court lifted the stay on the foreclosure of Hobby's home on December 14, 2012.
Hobby elected to participate in a foreclosure mediation session with Freedom on February 12, 2013. During this meeting, Hobby and Freedom reached an agreement wherein Freedom agreed not to proceed with its foreclosure until it reviewed, and acted upon, Hobby's application for a loan modification. Freedom also reserved the right to resume its foreclosure proceedings if Hobby failed to submit certain documentation supporting her application for a loan modification in a timely manner. On March 4, 2013, pursuant to the mediation agreement reached by Hobby and Freedom, the circuit court ordered that any foreclosure sale of Hobby's property be stayed for 60 days. The order further provided that the foreclosure case would be automatically dismissed without prejudice after the expiration of the 60 day stay, unless the substitute trustees filed a motion to lift the stay.
Ultimately, Hobby's request for a loan modification was denied. Thereafter, the circuit court granted the substitute trustees' request to lift the stay on the foreclosure proceedings. Hobby responded by filing a motion to stay or dismiss on April 2, 2013. In her motion, Hobby alleged that Freedom violated 24 C.F.R. § 203.604(b), which was incorporated into the deed of trust in this case, by not affording her an opportunity to engage in face-to-face mediation prior to the initiation of foreclosure proceedings. Nevertheless, on May 21, 2013 the substitute trustees conducted a foreclosure sale at which Freedom purchased Hobby's property. The substitute trustees filed a report of the foreclosure sale with the circuit court on June 18, 2013.
On June 5, 2013, the circuit court entered an order
(citations omitted).
Following the circuit court's denial of Hobby's motion to stay or dismiss, Hobby filed exceptions to the foreclosure sale. Hobby contended that the foreclosure sale was deficient because it occurred while a motion to stay or dismiss was pending before the circuit court. Hobby further claimed that the circuit court had already signed an order dismissing the foreclosure case without prejudice when the foreclosure sale occurred. The circuit court overruled Hobby's exceptions and ratified the foreclosure sale. In addressing Hobby's argument, the circuit court noted that:
This timely appeal followed.
Svrcek v. Rosenberg, 203 Md.App. 705, 720, 40 A.3d 494 cert. denied, 427 Md. 610, 50 A.3d 608 (2012).
Hobby contends that the circuit court improperly denied her motion to stay or dismiss Freedom's foreclosure action. In particular, Hobby argues that Freedom failed to comply with a particular federal regulation, 24 C.F.R. § 203.604, that applies to the deed of trust in the instant case. This regulation requires mortgagees to engage in certain loss mitigation procedures before they may foreclose on a property that serves as the mortgagor's residence. Indeed, Freedom, the substitute trustees, and Hobby all acknowledge that the deed of trust in this case incorporates 24 C.F.R. § 203.604 by virtue of the following clause:
Hobby contends that Freedom failed to comply with the requirements of 24 C.F.R. § 203.604 because it did not arrange a face-to-face interview with Hobby before initiating foreclosure proceedings against her. 24 C.F.R. § 203.604(b) provides:
24 C.F.R. § 203.604(b)(emphasis added). The text of 24 C.F.R. § 203.604, therefore, does not require that a face-to-face interview actually occur, provided the mortgagee makes "a reasonable effort to arrange such a meeting." Indeed, the very next subsection of the regulation reinforces this interpretation by providing that:
A face-to-face meeting is not required if:
24 C.F.R. § 203.604(c)(emphasis added). The regulation further defines "a reasonable effort" as follows:
24 C.F.R. § 203.604(d)(emphasis added).
In denying Hobby's motion to stay or dismiss the foreclosure case against her, the circuit court concluded that Freedom made a reasonable effort to arrange a face-to-face mediation with Hobby before the substitute trustees initiated the foreclosure action. The circuit court was particularly persuaded by a Field Contact Sheet proffered by the substitute trustees. This Field Contact Sheet detailed several attempts by Freedom to contact Hobby, which all occurred before February 28, 2010.
We hold that the circuit court did not abuse its discretion in denying Hobby's motion to stay or dismiss in this proceeding. As the circuit court correctly noted, the provisions of 24 C.F.R. § 203.604 do not require a face-to-face mediation prior to foreclosure if the mortgagee makes a reasonable effort to arrange such a meeting. To qualify as a reasonable effort under 24 C.F.R. § 203.604, the mortgagee must send at least one letter to the mortgagor and make one trip to the mortgaged property.
The Field Contact Sheet admitted into evidence — without any objections from Hobby — indicates that a representative of Freedom visited the mortgaged property on February 27, 2010, and left a letter for Hobby at the residence upon discovering that she was not home. As the trial court properly found, this clearly established that Freedom made a reasonable effort, as defined by the applicable federal regulations, to arrange a face-to-face mediation with Hobby before it elected to foreclose on the property. At the hearing on her
Assuming, arguendo, that Freedom did not make a reasonable effort to arrange a face-to-face mediation with Hobby prior to foreclosure, Hobby was not prejudiced by the lack of pre-foreclosure mediation. In the order to docket filed on July 6, 2012 (which initiated the foreclosure action), the substitute trustees informed Hobby that she could participate in a face-to-face foreclosure mediation session with Freedom before they chose to execute their power of sale. Hobby elected to engage in mediation with Freedom and, on February 12, 2013, the parties reached an agreement. The terms of this agreement provided that the substitute trustees would halt their foreclosure until they had evaluated Hobby's application for a loan modification and made a decision on her application. In order for Freedom to evaluate Hobby's application, Hobby was required to provide documentation of rental income that she claimed to be receiving from the property. The mediation agreement also explicitly provided that if Freedom did not receive the requested documentation by March 4, 2013, it was authorized to proceed with the foreclosure.
After reviewing Hobby's application and the supporting documentation, Freedom determined that Hobby was not entitled to a loan modification. As a result, the substitute trustees exercised their power of sale and sold the property to Freedom on May 21, 2013. The terms of the mediation agreement unambiguously permitted the substitute trustees to resume their foreclosure if Hobby's application for a loan modification was denied.
Furthermore, Hobby has failed to articulate any argument suggesting that her application for a loan modification would have been evaluated differently had mediation been held prior to the filing of the order to docket, rather than several months afterwards. Indeed, the Final Loss Mitigation Affidavit, filed with the order to docket on July 6, 2012, indicates that Freedom conducted a loss mitigation analysis of Hobby's loan in March of 2012. This analysis led Freedom to conclude that Hobby was not entitled to a loan modification because, at that time, she had been delinquent on her loan for over a year and a modification would have caused a deficit.
Fagnani v. Fisher, 190 Md.App. 463, 470-71, 988 A.2d 1134 (2010) aff'd, 418 Md. 371, 15 A.3d 282 (2011).
Hobby contends that the circuit court erred in failing to vacate the foreclosure sale of the property in this case. Hobby's argument, encapsulated in the exceptions she filed regarding the foreclosure sale, focuses on the fact that the court order granting Hobby's motion to stay or dismiss reflects that the order was signed on May 3, 2013. Hobby reasons that if the court granted her motion to stay or dismiss on May 3, 2013, then the foreclosure case was dismissed as of that date, and the substitute trustees lacked the authority to sell the property at the foreclosure sale held on May 21, 2013.
Hobby's emphasis on the date a court order was signed, however, is misplaced. Maryland Rule 2-601 provides:
Md. Rules 2-601(a)(emphasis added). Section (b) further provides:
Md. Rules 2-601(b)(emphasis added). Therefore, a judgment is only effective after it has been signed and entered into the record for a particular case. As noted, supra, the court order granting Hobby's motion to stay or dismiss was signed on
We hold that the circuit court did not abuse its discretion in declining to grant Hobby's exceptions and vacate the foreclosure sale. Because the circuit court did not docket its order granting Hobby's motion to stay or dismiss until after the foreclosure sale had taken place, the case was not stayed or dismissed at the time of the sale. The sale, therefore, was not conducted illegally. In denying Hobby's exceptions to the foreclosure sale, the circuit court explained:
Critically, we note that until a court order is entered into the case record or docketed, the parties to the litigation have no knowledge of it or the date upon which it was signed. It is therefore unreasonable to presume that Freedom could have gained awareness of the order granting Hobby's motion to stay or dismiss through any additional diligence.
For the foregoing reasons, we hold that the trial court properly exercised its discretion in declining to vacate the foreclosure sale. We further hold that the circuit court did not abuse its discretion in declining to dismiss the foreclosure action in this case.
Md. Code (1974, 2010 Repl.Vol.), § 7-105.1(c) of the Real Property Article.
The notice of intent to foreclosure, sent to Hobby on October 29, 2010, indicated that the most recent loan payment Freedom had received from Hobby was dated June 1, 2009. This suggests that Hobby only made one, single payment on her loan: the first required monthly payment. We are not aware, from our review of the record, of any evidence that Hobby tendered any further loan payments to Freedom, despite the fact that Hobby continued to reside in the mortgaged property for over 3 years.
