Opinion ID: 2318998
Heading Depth: 1
Heading Rank: 2

Heading: Polek v. J.P. Morgan Chase Bank, N.A.

Text: On 24 May 2009, Michael T. Polek Jr. and his wife, Linda L. Polek (the Poleks), obtained a secondary mortgage loan, secured by their primary residence, from Baltimore American Mortgage Corporation (BAMC). The principal amount of the loan was $40,000.00, with an interest rate of 12.125 percent. The scheduled last payment on the loan would have been due on 28 May 2014. On the day the loan closed, BAMC assigned the indebtedness and deed of trust to Banc One Financial Services, Inc. (Banc One), which later assigned the loan to Household Finance Corporation, III (Household Finance). J.P. Morgan Chase Bank, N.A. (J.P. Morgan Chase) is the successor to Banc One. The mandatory settlement sheet, HUD-1 form, provided to the Poleks at their closing reflected no charge for the line item origination fee, but rather itemized a number of other fees. [6] On 24 March 2010, the Poleks filed, in the Circuit Court for Baltimore City, a complaint against BAMC, J.P. Morgan Chase, and Banc One for violations of the SMLL in connection with the 2009 loan. The amended complaint (which added Household Finance as a defendant as the purported current holder of the Poleks' note) alleged that, at closing, the Poleks were charged fees in excess of the statutory maximum in § 12-405 and they were not provided a mandatory disclosure form required in § 12-407.1. The Poleks alleged that Banc One and Household Finance were not holders-in-due-course and, therefore, were subject to the claims asserted against BAMC. The amended complaint stated further that Banc One and Household Finance violated knowingly the SMLL, thereby entitling the Poleks to treble damages. The Poleks alleged that the HUD-1 form, received presumedly by the assignees in the course of the assignment, provided sufficient information to put on notice Banc One and Household Finance that the secondary mortgage loan was made in violation of the SMLL. J.P. Morgan Chase, Banc One, and Household Finance filed a motion to dismiss the amended complaint. Judge Evelyn Omega Cannon presided over a hearing on the motion to dismiss and, agreeing with the reasoning in a then recently decided United States District Court case, Hafford v. Equity One, Inc., 2008 WL 906015, 2008 U.S. Dist. LEXIS 31964 (D.Md.2008), concluded that the lenders had not violated the SMLL in any respect. The Circuit Court refused to construe Section 12-405 in a manner that would unreasonably and illogically require defendants to lump together all of those fees, denote those fees as a single loan origination fee, and to rob borrowers of the protection of being [informed] of the exact costs involved. Judge Cannon concluded also that the missing disclosure form, on its face, was required for commercial loans only; therefore, defendants had not violated § 12-407.1. The court granted the motion to dismiss, concluding that defendants were not subject to assignee liability under the SMLL, Md.Code (1957, 2002 Repl.Vol.) Com. Law Art., § 3-306, [7] or Maryland common law. The Poleks filed timely an appeal to the Court of Special Appeals. We issued a writ of certiorari, Polek v. J.P. Morgan Chase Bank, N.A., 420 Md. 81, 21 A.3d 1063 (2011), before the intermediate appellate court decided the appeal.