Norwest Bank Minnesota, N.A. v. Pence

WENNER, Judge. Appellants, Norwest Bank Minnesota, N.A., Trustee (Nor-west Bank) and Access Financial Services (Access) appeal from summary judgment granted by the Circuit Court for Baltimore City in favor of appellee, June Pence (Ms. Pence). On appeal, we are presented with the following questions, which we slightly rephrased for clarity: I. Did the trial court err when it found that the Baltimore City Deferred Loan was a lien of prior encumbrance that triggered the restrictions of the Maryland Secondary Mortgage Loan Act?

II

Did the trial court err when it held that the borrower’s claims were not preempted by federal law?

III

Did the trial court err when it stripped real estate taxes and other non-interest charges from the loan? TV. Did the trial court err when it permitted the borrower to repay the stripped loan over 30 years instead of the schedule contained in the loan’s note? We shall answer appellants’ first question in the affirmative, and reverse the judgment of the circuit court.

Consequently, we need not consider appellants’ remaining questions. Facts Ms. Pence resides at 1231 Anglesea Street, Baltimore, Maryland, the core of the dispute presently before us. In October of 1984, Ms. Pence entered into a loan agreement with the Mayor and City Council of Baltimore (the City) for a loan of $6265.00 (the City loan). The City loan was titled as a “mortgage,” and on 21 December 1984, was recorded among the land records for Baltimore City.

The City made such loans to qualified homeowners as part of the City’s ³⁶⁶ program to rehabilitate its housing. Under the loan’s terms, Ms. Pence agreed to subject her property to a rehabilitation easement and to the claims of the City. In addition, Ms. Pence was required to repay the City loan, together with interest at 3 per cent per annum, only if Ms. Pence transferred, sold, assigned, or abandoned the property, or if Ms. Pence ceased to own it because of death, condemnation, operation of law or otherwise. The City loan also contained a provision that would enable Ms. Pence’s heirs to assume the loan upon meeting certain conditions.

Sometime in October of 1991, Ms. Pence and her daughter obtained a loan of $30,002.55 from Banker’s First Mortgage, secured by a mortgage on 1231 Anglesea Street (The Banker’s First Mortgage). The loan was brokered by Maryland Financial Resources, Inc. (MFR), and was subsequently assigned to Commercial Credit. In September of 1994, MFR persuaded Ms. Pence and her daughter to refinance the Banker’s First Mortgage with a $38,500.00 loan from First Savings Bank FSB, secured by a mortgage on 1231 Anglesea Street (the FSB mortgage). This loan was originated by MFR, and at settlement, MFR charged Ms. Pence and her daughter a $1540 loan origination fee and a $700 loan discount. 1 Ms. Pence made monthly payments until September of 1996, when she ceased making payments.

Ms. Pence apparently had become disabled in August of 1996 and was no longer employed. Although she eventually received disability benefits, she was still unable to meet her monthly mortgage payment. Consequently, Ms. Pence was warned that the FSB mortgage would be foreclosed if her payments were not made current. Ms. Pence subsequently filed a complaint in the ³⁶⁷ Circuit Court for Baltimore City, claiming the FSB mortgage violated Md.Code (1975, 1990 Repl.Vol., 1999 Cum.Supp.) §§ 12-401 — 12—415 of the Com.

Law II Article (CL), the Maryland Secondary Mortgage Loan Law (SMLL). In January of 1998, appellants responded with a motion to dismiss or for summary judgment. After considering oral argument, the motion was denied, and the City loan was declared to be a lien of prior encumbrance. In July of 1998, appellants again filed a motion for partial summary judgment, seeking to limit certain issues, and to dismiss Access as a defendant.

The motion was denied without a hearing. In December of 1998, Ms. Pence filed a motion for partial summary judgment. The motion was granted, and final judgment was entered on 13 January 1999. Appellants’ motion to alter or amend was denied, and this appeal followed.

Standard of Review “The standard of appellate review of a trial court’s grant of a motion for summary judgment is whether the trial court was ‘legally correct.’ ” Pittman v. Atlantic Realty Co., 127 Md.App. 255, 269 , 732 A.2d 912 , cert. granted, 356 Md. 495 , 740 A.2d 613 (1999); Heat & Power Corp. v. Air Prods. & Chems., Inc., 320 Md. 584, 591 , 578 A.2d 1202 (1990). “In making our analysis, we do not accord deference to the trial court’s legal conclusions.” Lopata v. Miller, 122 Md.App. 76, 83 , 712 A.2d 24 , cert. denied, 351 Md. 286 , 718 A.2d 234 (1998). “[A] grant of summary judgment is appropriate only when the movant for summary judgment clearly demonstrates the absence of any genuine issue of material fact, and demonstrates that it is entitled to judgment as a matter of law.” Pittman at 269, 732 A.2d 912 . “In ruling on a motion for summary judgment, the court must consider the motion and response submitted by the parties in a light most favorable to the non-moving party.” Id. at 270 , 732 A.2d 912 . “It is ... clear that under Maryland’s summary judgment rule a trial court determines issues of law; it makes rulings as a matter of law, resolving no disputed issues of fact.” Beatty ³⁶⁸ v. Trailmaster Products, Inc., 330 Md. 726, 737 , 625 A.2d 1005 (1993). Trial courts must be mindful that, “[e]ven where the underlying facts are undisputed, if the undisputed facts are susceptible of more than one permissible factual inference, the choice between those inferences should not be made as a matter of law, and summary judgment should not be granted.” Heat & Power Corp. at 591, 578 A.2d 1202 . “[W]hen the moving party has set forth sufficient grounds for summary judgment, the opposing party must show with some precision that there is a genuine dispute as to a material fact.” King v. Bankerd, 303 Md. 98, 112 , 492 A.2d 608 (1985). “A material fact is a fact the resolution of which will somehow affect the outcome of the case.” Id. at 111 , 492 A.2d 608 . The party opposing the motion bears the burden of showing that material facts are in dispute. Beatty at 737, 625 A.2d 1005 . “[T]he mere existence of a scintilla of evidence in support of .the [opposing party’s] claim is insufficient to preclude the grant of summary judgment; there must be evidence upon which the jury could reasonably find for the [opposing party].” Id. at 738-39 , 625 A.2d 1005 .

As we believe the facts before us are undisputed, our task is to determine whether the trial court was legally correct in granting Ms. Pence’s motion for summary judgment. Discussion Appellants contend the trial court erred in determining that the City loan was a lien of prior encumbrance, thus subjecting the FSB mortgage to the SMLL. Under the SMLL, a loan secured by a mortgage becomes a “secondary mortgage loan”, subject to the provisions of the SMLL, only if the property securing the loan “[i]s subject to the lien of one or more prior encumbrances.” 2 As the Court ³⁶⁹ of Appeals noted in Chevy Chase Bank, FSB v. Chaires, 350 Md. 716 , 724 n. 3, 715 A.2d 199 (1998), a lien is defined by the SMLL only by way of inclusion. 3 Consequently, we must determine whether the trial court was legally correct in concluding that the City loan was a lien of prior encumbrance. As we shall explain, we believe that it was not.

Ms. Pence asserts a number of grounds for her claim that the City loan constitutes a lien. She first contends the City loan is a mortgage because it is titled as a mortgage, and is recorded among the land records of Baltimore City as a mortgage. We disagree. Although the City loan is recorded among the land records of Baltimore City as a “Mortgage from June Lila Pence,” it is clear that it is not a mortgage.

The loan simply does not meet the definition of a mortgage. A loan is secured by a mortgage when: the property is conveyed or assigned by the mortgagor to the