Foreclosure Notice That Does Not Identify The Secured Creditor, But Only The Entity With Authority To Act On Behalf Of The Secured Creditor To Negotiate The Loan, Does Not Comply With Georgia Law And Will Result In A Wrongful Foreclosure

In Reese v. Provident Funding Associates, LLP, A12A0619 (Ga. Ct. App. July 12, 2012) the mortgagors defaulted on a promissory note and mortgagee. The original lender sold the note but continued to act as the loan servicer. It sent a notice of foreclosure sale to the borrowers pursuant to Georgia law (OCGA § 44-14-162.2(a)) identifying itself as the secured creditor and the holder of the Note and the Security Deed. When the mortgagors did not cure the default the servicer held a non-judicial sale of their property. The mortgagors later brought a wrongful foreclosure action against the servicer contending among other things that the servicer did not comply with OCGA § 44-14-162.2(a) which required the secured creditor to provide a foreclosure notice before commencing proceedings. The trial court granted summary judgment to the servicer and the mortgagors appealed. The appellate court reversed. Upon considering the statute in its entirety, as well as the legislative intent, the court concluded that the statute requires that the notice properly identify the secured creditor and reflect that the notice is being sent by the secured creditor or by an entity with authority on behalf of the secured creditor. It was undisputed that at the time the servicer sent the notice of the foreclosure sale it was not the secured creditor. It was also not disputed that MERS was the grantee of the Security Deed at the time the notice was sent but the secured creditor was the actual owner of the loan. The court conceded there was some ambiguity in the statute in that reading it in toto it is not clear whether the statute requires the notice to reflect both the identity of the secured creditor giving the notice, and the person or entity with the full authority to negotiate, amend, and modify the mortgage, or just the latter. In resolving the ambiguity, the court relied heavily on a recent district court opinion, _Stubbs v. Bank of America_, No. 1:11-CV-1367-AT (N.D.Ga. Feb.16, 2012), which recognized that the statute was amended in 2008 to make transparent both the identity of the secured creditor with authority to foreclose and the identity (and contact information) of the party with authority to agree to a loan modification. They agreed with the federal court that the intent of the 2008 amendment was transparency in the foreclosure process and concluded that the true identity of the secured creditor must be included in the notice of foreclosure sale. It also noted that nothing in the statute would preclude the identification of both the secured creditor and the entity with the authority to negotiate, amend, and modify the mortgage. Justice Blackwell dissented stating that to the extent the servicer had the full authority to negotiate, amend, and modify all terms of the mortgage the notice complied with the statutory requirements.

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