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Panel disagrees on foreclosure settlement resolution

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The Indiana Court of Appeals has ruled that federal law and housing regulations require that deeds in lieu of foreclosure release the borrower from any mortgage obligation, and the mortgage company issuing an agreement can use that federal language in the contract.

Ronald Dyer and his wife entered an FHA-secured mortgage loan in 2008 for their home in Greene County, but after she died the husband defaulted on the loan now assigned to GMAC Mortgage. The company foreclosed, but they agreed to settle and decided to proceed with a deed in lieu of foreclosure. GMAC drafted a written agreement that included a provision using language required by the U.S. Housing and Urban Development that neither would pursue a deficiency judgment. Dyer didn’t feel it provided enough protection, and he refused to sign until a new agreement provided that he was released from all personal liability.

The trial court agreed with Dyer and ordered the contract be rewritten, but a two-judge Court of Appeal majority struck down that decision In GMAC Mortgage, LLC v. Ronald Glenn Dyer, No. 28A04-1107-MF-404.

Reviewing federal statute and HUD regulations, the appellate court found the language GMAC used was sufficient and protected Dyer. The state appellate panel disagreed with Dyer’s reliance on a single court opinion from Maryland in 1999 that found the “shall not be pursued for deficiency judgments” language not protective enough because HUD could still intercept future tax refunds pursuant to the Deficit Reduction Act of 1984.

The panel found that precedent doesn’t control here because it was written before the current statute and doesn’t apply to the facts in this case. Judge Nancy Vaidik wrote the opinion and Judge Edward Najam concurred.

Chief Judge Margret Robb concurred with the majority’s determination that a deed in lieu of foreclosure releases a borrower from any obligation under a mortgage. But she dissented with the specific resolution in this case, seeing no harm in including Dyer’s requested provision and saying she would affirm the trial court’s order requiring the agreement revision.

“If a deed in lieu of foreclosure does in fact release a mortgagor from personal liability and if everyone agrees Dyer should be released from personal liability, the requested provision would only clarify this reality,” she wrote. “HUD regulations do not prohibit parties adding language in addition to what is required, and Dyer is not attempting to remove a provision required by HUD.”

 

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  2. Hail to our Constitutional Law Expert in the Executive Office! “What you’re not paying attention to is the fact that I just took an action to change the law,” Obama said.

  3. What is this, the Ind Supreme Court thinking that there is a separation of powers and limited enumerated powers as delegated by a dusty old document? Such eighteen century thinking, so rare and unwanted by the elites in this modern age. Dictate to us, dictate over us, the massess are chanting! George Soros agrees. Time to change with times Ind Supreme Court, says all President Snows. Rule by executive decree is the new black.

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