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Hildebrand v. Bank of America, N.A.

Court of Appeals of Georgia

March 19, 2015

HILDEBRAND
v.
BANK OF AMERICA, N.A

Reconsideration denied April 14, 2015 -- Cert. applied for.

Note. Gwinnett State Court. Before Judge Rich.

David A. Cox, for appellant.

Kenney & Medina, Thomas S. Kenney; Johnson & Freedman, Melissa A. Meggison, for appellee.

OPINION

Barnes, Presiding Judge.

Janet Hildebrand appeals the trial court's grant of summary judgment to Bank of America, N.A., on its suit on a note for $50,844. Hildebrand argues that the court erred in granting the motion because the note was secured by a second mortgage that was " inextricably intertwined" with the first mortgage, which was foreclosed upon but not confirmed. For the reasons that follow, we affirm.

Hildebrand bought a condominium in July 2006. She borrowed $257,380 from the CDC Federal Credit Union, which prepared an " 80-20" mortgage loan package for her to sign. At the closing, Hildebrand signed two

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promissory notes, one for $205,100 and one for $51,280, each of which was secured by a separate deed on the property being purchased. The security deed on the larger note was given first priority, and the deed securing the smaller note was given second priority. Both deeds were dated July 31, 2006, and identified Hildebrand as the borrower and CDC Federal Credit Union as the lender. The deeds differed only slightly, in that the first priority security deed required Hildebrand to occupy the property within 60 days and remain there for at least a year unless the lender agreed otherwise in writing or the borrower experienced extenuating circumstances beyond her control. Another difference is that the final paragraph of the secondary lien deed, titled " Request for Notice of Default and Foreclosure Under Superior Security Deeds, Mortgages [332 Ga.App. 176] or Deeds of Trust," states:

Borrower and Lender request the holder of any security deed, mortgage, deed of trust or other encumbrance with a lien which has priority over this Security Instrument to give notice to Lender, at Lender's address set forth on page one of this Security Instrument, of any default under the superior encumbrance and of any sale or other foreclosure action.

After the sale closed, the credit union assigned the two notes to Taylor, Bean & Whitaker Mortgage Corporation, which subsequently assigned the smaller note to Bank of America, and the larger first mortgage note to Cenlar FSB. Green Tree Servicing, LLC, began servicing the second mortgage loan.

Hildebrand sent separate checks to the separate companies monthly, but eventually defaulted on both. She moved out of the condominium in December 2010, but continued to maintain and try to sell it. Hildebrand testified that she provided all of her financial information to both mortgage companies jointly to try to obtain permission to sell the property for less than the amount owed on the notes, so she thought she was negotiating with both of them. She obtained an offer to buy the property for $185,000, of which her real estate agent said Green Tree would get $3,000, but Cenlar would not agree to a short sale and Green Tree would not negotiate about settling the debt secured by the second mortgage.

On June 7, 2011, Cenlar foreclosed on the first priority deed on the property and was also the highest bidder at $116,021. Cenlar filed both its foreclosure deed and a special warranty deed transferring the property to the Federal Home Loan Mortgage Corporation (Freddie Mac) on September 23, 2011. Bank of America sued Hildebrand in August 2012, seeking payment on the promissory note for the principal amount of $50,842 plus interest and attorney fees. The trial court granted summary judgment to the bank " for the reasons stated in the [bank's] Motion and Reply Brief."

1. Hildebrand argues on appeal that the trial court erred in granting summary judgment to the bank, because the two loans were " inextricably intertwined" and that the eventual sale of the notes to different parties after the closing did not " unlink" them. Therefore, she asserts, the funds secured by the second promissory note constitute a deficiency that cannot be collected because the foreclosure pursuant to the first security deed was not confirmed. The bank responds that the first note and deed were held by a ...


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