Opinion ID: 2318998
Heading Depth: 1
Heading Rank: 6

Heading: Moore v. Residential Funding Co

Text: On 8 November 1996, Elizabeth and Alric Moore (the Moores) closed on a secondary mortgage loan, secured by their primary residence, with BAMC. The principal amount of the loan was $54,500.00. The last scheduled payment under the loan would have been due on 14 December 2021. At the closing, the note and deed of trust were assigned to Master Financial. Master Financial filed later for bankruptcy protection and the loan was assigned to The Chase Manhattan Bank as Indenture Trustee, Residential Funding Corporation (Residential), Attorney in Fact. J.P. Morgan Chase is the successor to The Chase Manhattan Bank. On 1 December 2004, a certificate of satisfaction as to the indebtedness was recorded because the Moores paid-off the loan early. On 11 May 2010, the Moores filed, in the Circuit Court for Baltimore City, a complaint against BAMC, Residential, and J.P. Morgan Chase for breach of contract and violations of the CPA and SMLL. Like the Dinnises and Mr. Schultz, the Moores did not retain copies of the documents from their closing, so they requested copies from Residential and J.P. Morgan Chase, which denied the request; therefore, when the complaint was filed, the Moores were unable to allege relevant facts from personal knowledge about the closing. The complaint alleged, nonetheless, that Residential and J.P. Mortgage Chase were subject to all claims against the original lender, BAMC, through assignee liability under Com. Law Art., § 3-306. The Moores alleged further that Residential and J.P. Morgan Chase were not holders-in-due-course because they had notice of the alleged SMLL violations based on information in the HUD-1 form allegedly received by Residential and J.P. Morgan Chase through the assignments. The Moores asserted similar violations of breach of contract, the CPA, and the SMLL as described in Dinnis, discussed supra. [11] On 12 November 2010, defendants filed a motion to dismiss for failure to state a claim upon which relief may be granted, which motion was granted by Judge Cannon. The Moores filed timely an appeal to the Court of Special Appeals, but we issued a writ of certiorari Moore v. Residential Funding Co., 422 Md. 353, 30 A.3d 193 (2011), before the intermediate appellate court decided the appeal. We granted certiorari in these cases to consider the following collective questions, [12] which we reword slightly: 1) Does § 12-405 of the SMLL limit lender compensation to only a single origination fee, or may a lender collect any number of separately labeled closing fees, costs and charges as long as the total amount of such fees, costs and charges, loan origination and finder's fees, if any, are less than ten percent of the net proceeds of the loan? (all of the cases) 2) Is the SMLL violated when a lender fails to provide a borrower the disclosure required § 12-407.1? (all of the cases) 3) Does an assignee's refusal to provide a borrower with a copy of the secondary mortgage loan file give rise to a cause of action under Maryland law? ( Dinnis, Schultz, and Moore) 4) Is an assignee of a secondary mortgage subject to the SMLL claims that could be raised by the borrower against the originating lender by operation of Com. Law Art., § 3-306, which provides that a person taking an instrument, other than a person having the rights of a holder-in-due-course, is subject to a claim of a possessory or property right in the instrument or its proceeds? (all of the cases) 5) Is an assignee of a secondary mortgage subject to the SMLL claims that could be raised by the borrower against the originating lender by operation of Maryland common law? (all of the cases) 6) Does the 12-year statute of limitations apply to SMLL claims brought against assignees of secondary mortgages? (all of the cases) We hold that: 1) a mortgage lender may itemize the fees it charges that relate to loan origination, so long as the aggregate total of the fees related to loan origination does not exceed the 10% statutory cap in § 12-405; 2) § 12-407.1 requires a disclosure only for borrowers disclosing that they will use the proceeds from the secondary mortgage loan for commercial purposes; and 3) assignees of secondary mortgage loans owe no implied duty to the borrowers to retain any loan closing documentation received, after the debt has been satisfied and the contractual requirements of the contract are discharged. [13] Finding no violations of the SMLL, the CPA, or the common law, we affirm the judgments of the Circuit Courts for Baltimore City and Anne Arundel County.