Saturday, March 21, 2015

Tucker v. Specialized Loan Servicing, LLC (Maryland U.S.D.C.)

Filed: February 3, 2015

Opinion by: Paul W. Grimm

Holding: A creditor waives an express condition precedent to a loan modification when it signs and accepts payments under that modification without satisfaction of the condition precedent.  

Facts: Plaintiff purchased a home through a mortgage loan and deed of trust, which she jointly executed with her husband (“Husband,” collectively “Plaintiffs”).  The deed of trust provided that Plaintiff could modify the terms of the mortgage loan without Husband’s approval.  Plaintiff later applied to her mortgage servicer for a permanent loan modification.  The servicer returned a signed copy of the modification agreement (the “Modification”), which stated that the modification was effective as of February 1, 2010.  Despite language in the Modification requiring signatures from both mortgagors, Husband never signed.  Plaintiff made payments under the Modification, which the were accepted.  The servicer later assigned the loan to Defendants.  Plaintiff continued to make payments pursuant to the Modification, which Defendants rejected, insisting that the Modification was ineffective.  Defendants reported to credit agencies that Plaintiffs were in default and appointed trustees to foreclose on the home.

Plaintiffs filed an action alleging, inter alia, violations of the Maryland Consumer Debt Collection Act and the Maryland Consumer Protection Act, defamation, injurious falsehood, and breach of contract.  Defendants moved to dismiss.

Analysis: The Court found that all of Plaintiff’s claims hinged on the validity of the Modification. Defendants contended that the Modification was ineffective because the servicer never waived, in writing, the stated requirement of both signatures. The Court rejected this argument, reasoning that statements or actions may constitute waiver of a condition precedent in a contract. Although the Modification expressly required both signatures, the servicer waived this requirement through its actions of returning the signed Modification and accepting payments without Husband’s signature. After rejecting Defendants' statute of limitations arguments, the Court denied the motion to dismiss.

The opinion is available in PDF.

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