Bulletin: MD2017003

Date:
August 22, 2017
To:
All Maryland Issuing Offices
RE:
UNDERWRITING - NEW Maryland Foreclosure Requirement Following Blackstone v. Sharma

Dear Associates:

The purpose of this Bulletin is to advise agents of the recent Court of Special Appeals (“COSA”) decision, Blackstone v. Sharma, 2017 Md. App. LEXIS 582, which affects underwriting requirements for insuring foreclosures after ratification by the circuit court and up to 3 years thereafter.

Background

In Blackstone, COSA affirmed Montgomery County Circuit Court’s holding that Ventures Trust 2013-I-H-R, a Delaware statutory trust, (“Ventures Trust”) “was required to be licensed as a collection agency [under the Maryland Collection Agency Licensing Act (“MCALA”)] and because Ventures Trust had not obtained such a license, any judgment entered as a result of the foreclosure action would be void.” COSA held that Ventures Trust fell under the definition of a “collection agency” because it was in the business of buying loans following a default by the borrower, and that foreclosing deeds of trust that secured such loans was a form of collection activity requiring licensing under MCALA. In affirming the lower court’s decision to dismiss the foreclosure actions, COSA relied on its holding in Finch v. LVNV Funding, LLC, 212 Md. App. 748, 764 (2013) that a “judgment entered in favor of an unlicensed debt collector constitutes a void judgment.” Further, the Maryland Court of Appeals has held that “a purchaser of property is not entitled to protections of a bona fide purchaser…if the previous deed was void…” Fishman v. Murphy ex rel. Estate of Urban, 433 Md., 534, 547 (2013). 

Action:

In light of the above, when reviewing foreclosure judgments, you must: 

  • Carefully review the foreclosure case pursuant to our Bulletin MD2014005
  • Confirm that the property is vacant if the property has not been transferred to a bona fide purchaser after foreclosure;  
  • Carefully review the foreclosure docket to ensure that the borrower has not filed any motions to dismiss, enjoin or stop the foreclosure. If the borrower has taken such actions, please contact a Stewart underwriter; and 
  • Carefully review the foreclosure docket, to ensure that there have not been any post-ratification motions for reconsideration or similar motions.    

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

For on-line viewing of this and other bulletins, please log onto www.vuwriter.com.

THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.

References

Bulletins Replaced:
None
Related Bulletins:
MD2014005 UNDERWRITING - Maryland Residential Deed of Trust Foreclosure Checklist
Underwriting Manual:
4.20 Deeds Of Trust
Exceptions Manual:
None
Forms:
None