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Debtor Fails to Allege Injury from Bank’s Rejection of Short Sale Offers
Padley v. Suntrust Mortgage, Inc.
In Padley v. Suntrust Mortgage, Inc., Judge Catherine C. Blake dismissed Plaintiff’s claims because Plaintiff failed to allege any injury. Plaintiff alleged that Defendant, the servicer of her primary mortgage and the holder of her second mortgage, caused her injury when Defendant failed to respond to multiple short sale offers and when Defendant sent Plaintiff an allegedly defective Notice of Intent to Foreclose. Judge Blake, however, held that Plaintiff did not allege an injury and that Plaintiff did not suffer any harm from the allegedly defective Notice of Intent to Foreclose.
Plaintiff Andrea Padley took out a loan of $264,000 with Defendant Suntrust Mortgage, Inc. to purchase a home in Annapolis Maryland. Plaintiff also took out a second mortgage of $66,000 with Defendant on the same home. Defendant sold the primary mortgage to the Federal Home Loan Mortgage Corporation (“Freddie Mac”), but retained ownership of the second mortgage. Defendant also maintained responsibility for servicing the primary mortgage.
In June 2009, as a result of financial hardship, Plaintiff engaged a realtor and counsel to negotiate a short sale with Defendant and to find potential buyers. Plaintiff found five (5) potential buyers of her home, who made offers which ranged from $235,000 to $285,000. Defendant, however, did not respond to any of the offers. In April 2010, Defendant foreclosed on Plaintiff’s home. In November 2010, Defendant sold the home in a foreclosure sale for $183,500.
Plaintiff filed a six (6)-count complaint against Defendant. Counts One (1) through Four (4) were filed as part of a putative class action, while Plaintiff filed counts Five (5) and Six (6) individually. Counts One (1) through Three (3) alleged violations of the Maryland Consumer Protection Act, the Maryland Consumer Debt Collection Act, and the Maryland Mortgage Fraud Protection Act. Count Four (4) sought declaratory relief. Count Five (5) also alleged a violation of the Maryland Consumer Protection Act and Count Six (6) alleged fraud.
Counts One (1) through Four (4) relied on an allegedly defective Notice of Intent to Foreclose that Defendant sent Plaintiff. The Notice of Intent to Foreclose did not list Freddie Mac as a secured party. Maryland law requires the Notice of Intent to Foreclose to list all secured parties. Plaintiff alleged that had she known of Freddie Mac’s interest in the first mortgage, she could have negotiated the short sale directly with Freddie Mac. Plaintiff, however, received notice of Freddie Mac’s interest in the property four (4) months prior to the foreclosure. Additionally, she received two (2) short sale offers after learning of Freddie Mac’s interest in the property and she did not negotiate with them directly. Therefore, Judge Blake held that she did not suffer any actual injury from the allegedly defective Notice of Intent to Foreclose.
Judge Blake also held that Plaintiff did not allege an injury for Count Five (5) of the Complaint. Count Five (5) alleged that Defendant failed to respond to the short sale offers, which resulted in a larger deficiency judgment for Plaintiff. Judge Blake, however, held that Defendant did not owe Plaintiff a duty to consider or to accept the short sale offers. Defendant only owed a duty to acknowledge receipt of the short sale offers. Defendant’s failure to respond to the short sale offers, however, did not cause Plaintiff any injury. Therefore, Judge Blake dismissed Count Five (5).
Judge Blake also dismissed Count Six (6). Count Six (6) alleged that Defendant committed fraud by accepting the short sale offers without considering them. Judge Blake found that Defendant did not make any statements concerning the offers. Therefore, Defendant could not commit fraud. As such, Judge Blake also dismissed Count Six (6).
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