      MEMORANDUM DECISION
                                                                                     FILED
      Pursuant to Ind. Appellate Rule 65(D),
      this Memorandum Decision shall not be                                    Jun 24 2019, 6:23 am

      regarded as precedent or cited before any                                      CLERK
                                                                                Indiana Supreme Court
      court except for the purpose of establishing                                 Court of Appeals
                                                                                     and Tax Court
      the defense of res judicata, collateral
      estoppel, or the law of the case.


      ATTORNEY FOR APPELLANT                                   ATTORNEYS FOR APPELLEE
      Duran L. Keller                                          David J. Jurkiewicz
      Keller Law, LLP                                          Nathan T. Danielson
      Lafayette, Indiana                                       Christina M. Bruno
                                                               Bose McKinney & Evans, LLP
                                                               Indianapolis, Indiana


                                                 IN THE
          COURT OF APPEALS OF INDIANA

      Edward Gaeta,                                            June 24, 2019
      Appellant-Defendant,                                     Court of Appeals Case No.
                                                               18A-MF-408
              v.                                               Appeal from the Tippecanoe
                                                               Superior Court
      The Huntington National Bank,                            The Honorable Randy J. Williams,
      Appellee-Plaintiff.                                      Judge
                                                               Trial Court Cause No.
                                                               79D01-1604-MF-97



      Mathias, Judge.


[1]   Following a bench trial, the Tippecanoe Superior Court entered judgment in

      favor of The Huntington National Bank (“Huntington”) in Huntington’s


      Court of Appeals of Indiana | Memorandum Decision 18A-MF-408 | June 24, 2019                      Page 1 of 25
      complaint for foreclosure against Edward Gaeta (“Gaeta”). Gaeta then filed a

      motion to correct error, which the trial court denied. Gaeta appeals and

      presents twelve issues, one of which we find dispositive and restate as: whether

      the trial court erred by concluding that Huntington complied with binding

      federal regulations governing Huntington’s actions in this foreclosure action.

      Concluding that the evidence clearly shows that Huntington did not comply

      with the federal regulations, which are a condition precedent to it seeking

      foreclosure on the mortgage at issue, we reverse and remand.


                                     Facts and Procedural History

[2]   In September 2008, Gaeta executed a promissory note (the “Note”) payable to

      Huntington in the principal amount of $78,859. This loan was secured via a

      mortgage (the “Mortgage”) against a residence on Chilton Drive in Lafayette,

      Indiana (“the Property”). The terms of the Note required Gaeta to make

      monthly payments of $498.45, plus additional amounts to be placed in escrow

      for property taxes.1 The loan was insured by the Federal Housing

      Administration (“FHA”), thereby subjecting the Note and Mortgage to

      regulations promulgated by the federal Department of Housing and Urban

      Development (“HUD”). In fact, the Note and Mortgage expressly incorporate

      the relevant HUD regulations.




      1
          Although it is not entirely clear, it appears that the total monthly payment due was approximately $644.

      Court of Appeals of Indiana | Memorandum Decision 18A-MF-408 | June 24, 2019                       Page 2 of 25
[3]   Gaeta failed to make a timely payment on the first due date of November 1,

      2008. Instead, he made a payment of $644.61 on November 24, 2008. The

      following month, he made a payment of $619.82 on December 23, 2008. Gaeta

      did not make any payment in January 2009, but he did make two payments of

      $619.82 on February 9, 2009. Gaeta then made no payments in March or April

      2009, but made a payment of $644.61 on May 15, 2009, which was applied to

      the March payment. Gaeta made no payment in June 2009. Thus, at that point,

      he was three months behind in his payments, as the payments for April, May,

      and June were unpaid. This is important because federal regulations require

      Huntington to engage in certain steps, including seeking a face-to-face meeting

      with the mortgagor, “before three full monthly installments due on the

      mortgage are unpaid” on an FHA loan. 24 C.F.R. § 203.604(b).


[4]   After Gaeta made no payment on June 1, 2009, Huntington, on June 6, 2009,

      called Gaeta regarding his delinquency. Gaeta indicated that he intended to

      make a payment on his loan that month. But Gaeta made no payment that

      June. On July 14, 2009, Gaeta called Huntington, and he and an employee of

      Huntington discussed a repayment program. Six days later, a Huntington

      employee made a note in Gaeta’s loan file indicating that Gaeta and

      Huntington had reached a repayment plan. Huntington also sent Gaeta a letter

      on July 20, 2009, setting out the terms of the repayment plan as follows:


              Your mortgage loan is in default in the amount of $2,614.44.

              The following repayment plan is the first step in bringing your
              loan current.

      Court of Appeals of Indiana | Memorandum Decision 18A-MF-408 | June 24, 2019   Page 3 of 25
              PLAN DATE                    AMT              PLAN DATE                AMT
              01          07/24/09         1,250.00         02         08/24/09      824.82
              03          09/24/09         824.82           04         10/24/09      824.82
              05          11/24/09         824.82           06         12/24/09      824.82
              07          01/24/10         824.82

              It is understood that the terms and provisions of the note and
              security instrument securing the captioned loan shall remain in
              full force and effect. Should you fail to honor the above
              repayment plan, legal proceedings according to the terms of the
              said note and security instrument could be initiated. Huntington
              Mortgage reserves the right to alter this Repayment Agreement
              should requirements for the escrow deposit increase or decrease.

              Please review the attached terms of the Repayment Agreement.
              Sign and return both the Repayment Agreement and the
              Repayment Agreement Requirements in the postage paid
              envelope provided. We have provided you with a copy of both,
              for your records. Do not return the copy. Post it in a conspicuous
              place for easy reference. These items must be returned no later
              than July 30, 2009. If the agreement letters are not returned the
              plan is voided.


      Ex. Vol. 1, Plaintiff’s Ex. 13.


[5]   Although Gaeta did not sign or return the repayment plan agreement to

      Huntington, he made a payment of $1,250 on July 24, 2009, in apparent

      compliance with the repayment plan. Huntington applied the $1,250 payment

      to the April and May 2009 installments. Under the terms of the repayment plan,

      the June 1, 2009 installment was due on August 24, 2009, but Gaeta made no

      further payments under the repayment plan. And when Huntington attempted

      to call Gaeta on August 31, 2009, it was unable to reach him.

      Court of Appeals of Indiana | Memorandum Decision 18A-MF-408 | June 24, 2019            Page 4 of 25
[6]   Huntington’s inability to reach Gaeta at this time was apparently due to the fact

      that, on August 25, 2009, he had enlisted in the United States Marine Corps

      and moved out of the Property to attend boot camp. Thereafter, until August

      2014, Gaeta rented out the Property to a third party.


[7]   On September 8, 2009, when the June 2009 installment was still due,

      Huntington received an $800.00 payment on the Loan. Huntington returned

      this payment the following day. But when an $800 payment posted to the

      account on October 12, 2009, Huntington did not return this payment. Instead,

      Huntington applied this to the June 2009 installment. Nor did Huntington

      return a $700 payment made on November 16, 2009, which Huntington applied

      to the July 2009 installment.


[8]   On November 25, 2009, Gaeta called Huntington to inform them that he had

      finished boot camp and was renting the Property to a third party. Gaeta and

      Huntington also discussed a new repayment plan, under which Gaeta would

      make an initial payment of $800 on December 4, 2009, and six payments of

      $994.89 from January 16, 2010 through June 16, 2010.


[9]   Gaeta made an $800 payment via check on December 1, 2009, in compliance

      with the terms of the new repayment plan. Huntington applied this payment to

      the August 2009 installment, but the check was later returned for insufficient

      funds. Gaeta made no further payments until July 15, 2010, which Huntington

      applied to the still-unpaid August 2009 installment. On June 1, 2012,

      Huntington received a $107.02 payment, but returned this payment on June 26,


      Court of Appeals of Indiana | Memorandum Decision 18A-MF-408 | June 24, 2019   Page 5 of 25
       2012. Although Gaeta continued to make periodic payments on his mortgage

       while in the Marines, he never paid enough to bring the loan current.

[10]   While Gaeta remained on active duty the military, Huntington took no steps to

       accelerate the loan or foreclose the mortgage. A Huntington representative later

       explained that Huntington withheld action due to the Servicemembers Civil

       Relief Act (“SCRA”), 50 U.S.C. §§ 3901–4043, which barred Huntington from

       foreclosing while Gaeta was on active duty or for one year after he returned

       from active duty, without prior court approval. See 50 U.S.C. § 3953. Thus,

       according to Huntington, it “self-imposed a SCRA-related foreclosure hold on

       the Loan.” Appellee’s Br. at 17 n.7.


[11]   On September 1, 2014, after his active service in the Marines ended, Gaeta

       began to live in the Property again. On July 30, 2015, Huntington received a

       $700.00 payment on the loan, which it applied to the then-delinquent May 2014

       installment. On August 12, 2015, Huntington mailed Gaeta a Notice of

       Intention to Accelerate and Foreclose. This notice informed Gaeta of his

       default and gave him an opportunity to cure, but Huntington still did not offer

       Gaeta the opportunity for a face-to-face meeting.


[12]   On November 30, 2015, Huntington filed a foreclosure action against Gaeta in

       the Tippecanoe Superior Court under Cause No. 79C01-1511-MF-00228 (the

       “Prior Foreclosure Action”). Thereafter, on January 4, 2016, Gaeta requested a

       settlement conference, which was held on February 1, 2016. However, the

       parties were unable to reach a settlement agreement.


       Court of Appeals of Indiana | Memorandum Decision 18A-MF-408 | June 24, 2019   Page 6 of 25
[13]   On February 9, 2016, over six years since Gaeta first fell more than three

       months behind in his mortgage payments, Huntington finally sent a letter to

       Gaeta offering the opportunity for a face-to-face meeting. Huntington

       employees then attempted to visit Gaeta to meet with him face to face on

       February 12, February 14, and February 16, 2016, but Gaeta was not at home.

       On February 22, 2016, the Prior Foreclosure Action was dismissed without

       prejudice.


[14]   On March 1, 2016, Gaeta telephoned Huntington and requested a face-to-face

       meeting.2 In response, a Huntington employee informed Gaeta of two local

       branches Gaeta could visit. The Huntington employee also told Gaeta how to

       contact a local branch to schedule a meeting and informed him that, if he went

       to a branch, a loan officer could speak with him and help him complete a loss-

       mitigation packet. Gaeta never requested a loan mitigation packet, nor did he

       visit any branch of Huntington.


[15]   On April 8, 2016, Huntington filed a second complaint on the Note and to

       foreclose the mortgage. Gaeta filed an answer on July 19, 2016, asserting

       eighteen affirmative defenses. On November 7, 2016, Huntington filed a




       2
         Huntington makes much of the fact that Gaeta made this call with his counsel present and also recorded the
       call without informing the Huntington employee with whom he was speaking that the call was being
       recorded. We note, however, that under the Indiana Wiretap Act, only the consent of one party—either the
       sender or the receiver—is required to record a telephone call. See Dommer v. Dommer, 829 N.E.2d 125, 139
       (Ind. Ct. App. 2005) (citing Ind. Code § 35-33.5-1-5 (now codified at Ind. Code § 35-31.5-2-176)), trans.
       denied; see also Wynne v. Burris, 105 N.E.3d 188, 192 (Ind. Ct. App. 2018) (“The recording of a
       communication with the consent of either the sender or the receiver is not an interception, as defined by the
       Indiana Wiretap Act.”). Thus, the fact that Gaeta recorded this call is of no moment.

       Court of Appeals of Indiana | Memorandum Decision 18A-MF-408 | June 24, 2019                    Page 7 of 25
       motion for summary judgment. Gaeta filed a response opposing summary

       judgement on April 17, 2017. The trial court held a summary judgment hearing

       on June 12, 2017. Four days later, Gaeta filed a motion for leave to file an

       amended answer, along with his proposed amended answer. Huntington

       objected to Gaeta’s motion for leave to amend. On August 2, 2017, the trial

       court denied Gaeta’s motion for leave to amend his answer and also denied

       Huntington’s motion for summary judgment.


[16]   A bench trial was held on August 30, 2017. After Huntington rested its case-in-

       chief, Gaeta moved for a judgment on the evidence and again moved to amend

       his answer to assert additional affirmative defenses. The trial court denied the

       motion for judgment on the evidence but took the motion to amend under

       advisement. At the conclusion of the trial, the court took the matter under

       advisement and ordered both parties to submit post-trial briefs and proposed

       orders by October 6, 2017.


[17]   On September 1, 2017, before the trial court issued its judgment on the trial,

       Gaeta filed what he dubbed a motion to correct error claiming that the trial

       court erred by denying his pretrial motion for leave to amend.3 After

       Huntington filed its response, the trial court denied Gaeta’s motion on

       September 19, 2017.




       3
        A motion to correct error is proper only after the entry of final judgment; any such motion filed prior to the
       entry of final judgment must be viewed as a motion to reconsider. Snyder v. Snyder, 62 N.E.3d 455, 458 (Ind.
       Ct. App. 2016).

       Court of Appeals of Indiana | Memorandum Decision 18A-MF-408 | June 24, 2019                        Page 8 of 25
[18]   On December 20, 2017, the trial court entered its findings of fact and

       conclusions of law. The trial court found that Gaeta was in default and that

       Huntington had satisfied any conditions precedent to foreclosure, specifically

       meeting certain requirements set forth in HUD regulations that Gaeta had

       raised as affirmative defenses. With regard to Gaeta’s affirmative defense based

       on 24 C.F.R. § 203.604, the trial court determined:

                  18. Mortgagors can raise an affirmative defense of failure to
                  perform a condition precedent by asserting that mortgagees failed
                  to comply with HUD servicing regulations prior to commencing
                  foreclosure.

                                                       ***

                  20. The Court finds that as of July 1, 2009, Gaeta was three full
                  monthly installments delinquent on the Loan payments, which
                  was due for April 1, 2009.

                  21. The Court finds sufficient evidence establishing that around
                  July 14, 2017 [sic][4] the parties verbally intended to enter into a
                  repayment plan. Gaeta made the first payment of $1,250.00 per
                  the terms, but failed to execute and return the written repayment
                  plan and further failed to timely make the subsequent payment.
                  The Court, therefore, concludes that no repayment plan was
                  entered into, though Gaeta made periodic payments thereafter.

                  22. The Court finds that following application of the $1,250.00
                  payment on July 24, 2009, Gaeta was less than three full monthly
                  installments delinquent on the Loan payments.




       4
           This actually occurred in July 2009.

       Court of Appeals of Indiana | Memorandum Decision 18A-MF-408 | June 24, 2019      Page 9 of 25
        23. The Court finds Gaeta did not live in the Property between
        August 25, 2009 through early November 2014.

        24. The Court finds that as of September 1, 2009, Gaeta was
        three full monthly installments delinquent on the Loan
        payments, which was due for June 1, 2009. The Court finds that
        as of this time, pursuant to 24 CFR § 203.604(c), a face-to-face
        interview was not required because Gaeta did not reside in the
        Property.

        25. The Court finds sufficient evidence establishing that around
        November 25, 2009, the parties verbally agreed to terms for a
        repayment plan. Gaeta sent in a first payment of $800.00 by
        December 1, 2009 in accordance with the terms but this payment
        was not applied due to it being rejected for non-sufficient funds.
        The Court, therefore, concludes that the repayment plan was
        void.

        26. The Court finds that following the failure to enter into the
        repayment plan pursuant to 24 CFR § 203.604(c), a face-to-face
        interview was not required because Gaeta did not reside in the
        Property.

        27. The Court finds that following Gaeta moving back to the
        Property in 2015, the 24 CFR § 203.604 face-to-face interview
        was not required as Gaeta failed to bring the Loan current or
        paid within fully monthly installments during that time, or any
        time thereafter.

        28. The Court concludes the evidence sufficiently establishes that
        the 24 CFR § 203.604 face-to-face interview was not required,
        and that Huntington complied with its requirements. Further,
        even if the face-to-face interview was otherwise required,
        Huntington offered one and Gaeta, by his actions, refused.


Appellant’s App. pp. 26–29 (citation omitted). The trial court also concluded

that Gaeta had failed to establish his other claimed affirmative defenses. The

Court of Appeals of Indiana | Memorandum Decision 18A-MF-408 | June 24, 2019   Page 10 of 25
       trial court’s order included a money judgment in favor of Huntington, a decree

       foreclosing the mortgage, and an order to sell the Property.

[19]   On January 17, 2018, Gaeta filed a motion to correct error, this time claiming

       error in the trial court’s final judgment. The trial court denied this motion on

       February 2, 2018, and Gaeta filed a notice of appeal on February 20, 2018.


                                          Standard of Review
[20]   Here, the trial court entered findings of fact and conclusions sua sponte. In such

       cases, the trial court’s specific findings control only with respect to the issues

       they cover, and a general judgment standard applies to issues outside the trial

       courts findings. Collyear-Bell v. Bell, 105 N.E.3d 176, 183–84 (Ind. Ct. App.

       2018). The trial court’s findings or judgment will be set aside only if they are

       clearly erroneous. Id. at 184. A finding of fact is clearly erroneous when there

       are no facts or inferences drawn therefrom to support it. Id. On appeal, we

       neither reweigh the evidence nor reassess witness credibility, and the evidence

       should be viewed most favorably to the judgment. Id.


[21]   Of course, to the extent that our decision requires us to interpret the contractual

       language of the note or mortgage, or interpret the language of a statute, our

       review is de novo, as these issues present pure questions of law. Smith v.

       Champion Trucking Co., 925 N.E.2d 362, 364 (Ind. 2010); Dunn v. Meridian Mut.

       Ins. Co., 836 N.E.2d 249, 251 (Ind. 2005).




       Court of Appeals of Indiana | Memorandum Decision 18A-MF-408 | June 24, 2019   Page 11 of 25
                                      Discussion and Decision

[22]   Gaeta’s first six arguments all revolve around the application of a particular

       HUD regulation: 24 C.F.R. § 203.604. This regulation, entitled “Contact with

       the mortgagor,” provides in relevant part:

               (b) The mortgagee must have a face-to-face interview with the
               mortgagor, or make a reasonable effort to arrange such a
               meeting, before three full monthly installments due on the
               mortgage are unpaid. If default occurs in a repayment plan
               arranged other than during a personal interview, the mortgagee
               must have a face-to-face meeting with the mortgagor, or make a
               reasonable attempt to arrange such a meeting within 30 days
               after such default and at least 30 days before foreclosure is
               commenced . . . .

               (c) A face-to-face meeting is not required if:

                    (1) The mortgagor does not reside in the mortgaged property,
                    (2) The mortgaged property is not within 200 miles of the
                    mortgagee, its servicer, or a branch office of either,
                    (3) The mortgagor has clearly indicated that he will not
                    cooperate in the interview,
                    (4) A repayment plan consistent with the mortgagor’s
                    circumstances is entered into to bring the mortgagor’s
                    account current thus making a meeting unnecessary, and
                    payments thereunder are current, or
                    (5) A reasonable effort to arrange a meeting is unsuccessful.

               (d) A reasonable effort to arrange a face-to-face meeting with the
               mortgagor shall consist at a minimum of one letter sent to the
               mortgagor certified by the Postal Service as having been
               dispatched. Such a reasonable effort to arrange a face-to-face
               meeting shall also include at least one trip to see the mortgagor at
               the mortgaged property, unless the mortgaged property is more
       Court of Appeals of Indiana | Memorandum Decision 18A-MF-408 | June 24, 2019   Page 12 of 25
               than 200 miles from the mortgagee, its servicer, or a branch office
               of either, or it is known that the mortgagor is not residing in the
               mortgaged property. . . .


       24 C.F.R. § 203.604.

[23]   This court had opportunity to address 24 C.F.R. § 203.604 in Lacy-McKinney v.

       Taylor Bean & Whitaker Mortgage Corp., 937 N.E.2d 853 (Ind. Ct. App. 2010).

       The Lacy-McKinney court provided the following background on FHA-insured

       mortgages:


               The FHA, which was created by the National Housing Act of
               1934, “is the largest government insurer of mortgages in the
               world.” The FHA, which is a part of HUD, provides mortgage
               insurance on single-family, multifamily, manufactured homes,
               and hospital loans made by FHA-approved lenders throughout
               the United States and its territories. Under this program,
               mortgagee/lenders are induced to make essentially risk-free
               mortgages by being guaranteed against loss in the event of default
               by the mortgagor. Anderson v. U.S. Dep’t of Hous. & Urban Dev.,
               701 F.2d 112, 113–14 (10th Cir. 1983). This program allows
               mortgagees to offer loans to low-income families at a more
               favorable rate than would otherwise be available in the market.
               Id. The availability of affordable mortgages, in turn, promotes
               Congress’s “national goal” of “a decent home and suitable living
               environment for every American family.” 12 U.S.C. § 1701t

               Pursuant to the authority conferred by Congress, HUD
               promulgated regulations pertaining to HUD-insured mortgages.
               The regulations regarding a mortgagee’s servicing responsibilities
               of such mortgages are codified in Title 24, Part 203 (Single
               Family Mortgage Insurance), Subpart C (Servicing
               Responsibilities) (“Subpart C”) of the Code of Federal
               Regulations (“CFR”). 24 C.F.R. §§ 203.500–.681. Subpart C

       Court of Appeals of Indiana | Memorandum Decision 18A-MF-408 | June 24, 2019   Page 13 of 25
               contains mortgagee servicing responsibilities and also provides
               certain relief for the mortgagor, e.g., “conditions of special
               forbearance,” 24 C.F.R. § 203.614, “mortgage modification.,” 24
               C.F.R. § 203.616, and a requirement that “[c]ollection techniques
               must be adapted to individual differences in mortgagors and take
               account of the circumstances peculiar to each mortgagor,” 24
               C.F.R. § 203.600.

               A mortgagee who participates in this HUD program must
               comply with the servicing responsibilities set forth in Subpart C.
               One of Subpart C’s requirements, which is pertinent to this
               appeal, mandates that a mortgagee must initiate face-to-face
               contact with the mortgagor prior to foreclosure. 24 C.F.R. §
               203.604. . . .

                                                       ***

               “It is the intent of the Department [HUD] that no mortgagee
               shall commence foreclosure or acquire title to a property until
               the requirements of this subpart [C] have been followed.” 24
               C.F.R. § 203.500.


       Lacy-McKinney, 937 N.E.2d at 860 (emphasis added) (internet citations

       omitted).

[24]   The Lacy-McKinney court held that non-compliance with HUD regulations

       could be used as an affirmative defense to a mortgage forfeiture complaint. Id.

       at 862–63 (citing Bankers Life Co. v. Denton, 458 N.E.2d 203 (Ill. App. Ct. 1983).

       This is true even though the HUD regulations do not create a private cause of

       action. Id. (citing Cross v. Fed. Nat’l Mort. Ass’n, 359 So.2d 464 (Fla. Dist. Ct.

       App. 1978); Wells Fargo Home Mortg., Inc. v. Neal, 922 A.2d 538, 549 (Md. 2007);

       Fed. Nat’l Mortg. Ass’n v. Ricks, 372 N.Y.S.2d 485, 497 (N.Y. Sup. Ct. 1975)).


       Court of Appeals of Indiana | Memorandum Decision 18A-MF-408 | June 24, 2019   Page 14 of 25
[25]   The Lacy-McKinney court further held that non-compliance with HUD

       regulations is not merely an equitable defense akin to the doctrine of unclean

       hands. Instead, the court stated:


               We find it problematic to treat such noncompliance merely as an
               equitable remedy. If noncompliance with HUD regulations is
               merely “unclean hands,” a court may be precluded from
               requiring compliance in cases where the mortgagor is also
               deemed to have unclean hands. Hence, the equitable approach is
               limited in its ability to promote a mortgagee’s compliance with
               HUD regulations. Instead, we agree with the reasoning of
               Denton and view the affirmative defense of noncompliance
               with HUD regulations as the failure of the mortgagee to satisfy
               a HUD-imposed condition precedent to foreclosure.


       Lacy-McKinney, 937 N.E.2d at 863 (emphasis added).


[26]   In the present case, Gaeta argues that Huntington violated this regulation by

       failing to have a face-to-face interview with him before three full monthly

       installments due on his mortgage went unpaid back in June 2009. It is

       undisputed that Huntington did not attempt a face-to-face meeting with Gaeta

       before he was three full monthly installments behind in his payments. In Lacy-

       McKinney, this court clearly held that compliance with 24 C.F.R. § 203.604 was

       a condition precedent to foreclosure. 937 N.E.2d at 863. As a general rule, a

       condition precedent must be fulfilled, or no liability can arise on the promise

       that the condition qualifies. L.H. Controls, Inc. v. Custom Conveyor, Inc., 974




       Court of Appeals of Indiana | Memorandum Decision 18A-MF-408 | June 24, 2019   Page 15 of 25
       N.E.2d 1031, 1050 (Ind. Ct. App. 2012) (citing McGraw v. Marchioli, 812 N.E.2d

       1154, 1157 (Ind. Ct. App. 2004)).5

[27]   Huntington does not deny that it failed to have a face-to-face interview with

       Gaeta before three full monthly installments due on the mortgage were unpaid

       in June 2009. Nor is there any evidence that Huntington made a reasonable

       effort to arrange such a face-to-face meeting with Gaeta before three full

       monthly installments due were unpaid.


[28]   Instead, Huntington simply called Gaeta on June 6, 2009, with regard to his

       delinquency. Huntington also discussed a repayment plan with Gaeta on July

       20, 2009, after Gaeta called Huntington. Huntington sent Gaeta a proposed

       repayment plan, and although he did not sign the repayment plan, he did make

       one payment under the terms of the plan. The trial court concluded that, after

       applying this July 24, 2009 payment, “Gaeta was less than three full monthly

       installments delinquent on the Loan payments.” Appellant’s App. p. 28.

       However, this does not negate the fact that Gaeta had already been more than

       three months behind in his payments, yet Huntington did not contact him to

       attempt to have a face-to-face meeting as required by 24 C.F.R. § 203.604,




       5
         “One party's compliance with a condition precedent, however, may be excused by the other party's waiver.
       Id. at 1050–51. “Waiver of a contractual provision is an intentional relinquishment of a known right
       involving both knowledge of the existence of the right and the intent to relinquish it.” Id. at 1051. “‘Waiver
       may be implied from the acts, omissions, or conduct of one of the parties to the contract.’” Id. (quoting
       Westfield Nat. Ins. Co. v. Nakoa, 963 N.E.2d 1126, 1132 (Ind. Ct. App. 2012), trans. denied). Here, there is no
       indication that Gaeta ever waived the HUD-imposed conditions precedent, and Huntington does not argue
       that these provisions were waived.

       Court of Appeals of Indiana | Memorandum Decision 18A-MF-408 | June 24, 2019                      Page 16 of 25
       which requires a meeting before a mortgagor becomes more than three months

       delinquent in his or her payments.


[29]   After Gaeta joined the Marines, Gaeta made some payments toward the loan

       but never brought the account current. Huntington chose not to seek court

       approval under SCRA to foreclose on the mortgage while Gaeta was on active

       duty or for one year after he returned from active duty. The trial court properly

       concluded that no face-to-face meeting was required at this time, as Gaeta no

       longer lived in the Property. See 24 C.F.R. § 203.604(c)(1) (providing that no

       face-to-face meeting is required if the mortgagor does not reside in the

       mortgaged property).


[30]   On July 30, 2016, almost one year after Gaeta began to live in the Property

       after his return from active duty, he made a $700 payment, which Huntington

       applied to the then-delinquent May 2014 installment. At this point, Gaeta was

       over one year behind in his mortgage payments, yet Huntington still did not

       offer Gaeta the opportunity for a face-to-face meeting. Instead, Huntington

       gave Gaeta notice of his default and one last opportunity to cure. On November

       30, 2015, Huntington filed the Prior Foreclosure Action, still without ever

       having conducted or attempted to conduct a face-to-face meeting with Gaeta, in

       clear violation of the applicable HUD regulations.


[31]   It was not until February 9, 2016, after it had already filed the Prior Foreclosure

       Action, and over six years after Gaeta first became more than three full months

       behind in his payments, that Huntington finally sent Gaeta a letter offering him


       Court of Appeals of Indiana | Memorandum Decision 18A-MF-408 | June 24, 2019   Page 17 of 25
       the opportunity for a face-to-face meeting. By this time, almost a year and a half

       had passed since Gaeta had returned from the Marines and had yet to bring his

       account current.


[32]   From this, it is abundantly clear that Huntington did not have, or attempt to

       have, a face-to-face meeting with Gaeta before he became more than three

       months behind in his mortgage payments in June 2009. We recognize that,

       under 24 C.F.R. § 203.604(c)(4), a face-to-face meeting is not required if the

       parties enter into a “repayment plan consistent with the mortgagor’s

       circumstances . . . thus making a meeting unnecessary, and payments

       thereunder are current[.]” Here, however, the trial court specifically found that,

       although Huntington discussed a repayment plan with Gaeta, and Gaeta even

       made one payment under the terms of the proposed repayment plan, that “no

       repayment plan was entered into” by the parties. Appellant’s App. p. 28. And

       there is evidence to support this conclusion, i.e. that Gaeta never signed the

       letter memorializing repayment plan and never made any further payments

       under that plan.


[33]   Accordingly, payments under the proposed repayment plans were not current,

       and the exception to the face-to-face meeting requirement contained in 24

       C.F.R. § 203.604(c)(4) is inapplicable. And again in November 2009, the parties

       verbally agreed to a repayment plan, but the $800 check Gaeta tendered was

       returned for insufficient funds, and the trial court found that this repayment

       plan was therefore “void,” and Gaeta was never current under the terms of the



       Court of Appeals of Indiana | Memorandum Decision 18A-MF-408 | June 24, 2019   Page 18 of 25
       plan. Thus the exception contained in Section 203.604(c)(4) was again

       inapplicable.

[34]   The trial court also concluded that, after Gaeta returned from active duty and

       moved back into the Property, a “face-to-face interview was not required as

       Gaeta failed to bring the Loan current or paid within fully monthly installments

       during that time, or any time thereafter.” Appellant’s App. p. 28. But 24 C.F.R.

       § 203.604 does not require the mortgagor to be current before triggering the

       face-to-face meeting requirement. To the contrary, it requires the meeting be

       held or attempted before the mortgagor becomes more than three full months

       delinquent in payments. That is, 24 C.F.R. § 203.604 requires that the

       mortgagor be behind in payments before triggering the face-to-face meeting

       requirement, and the fact that Gaeta was behind in his payments is not a reason

       to excuse Huntington’s failure to comply with this condition precedent.

[35]   The trial court also concluded that the face-to-face meeting “was not required,

       and that Huntington complied with its requirements. Further, even if the face-

       to-face interview was otherwise required, Huntington offered one and Gaeta, by

       his actions, refused.” Id. at 29. As discussed above, however, the evidence was

       clear that, by June 2009, Gaeta was three months behind in payments,

       triggering the requirements of 24 C.F.R. § 203.604, yet Huntington did not

       attempt a face-to-face meeting. To the extent the trial court concluded

       otherwise, this was clearly erroneous.




       Court of Appeals of Indiana | Memorandum Decision 18A-MF-408 | June 24, 2019   Page 19 of 25
[36]   Although there was evidence that Huntington contacted Gaeta in February

       2016 to offer a face-to-face meeting, this was six years after Huntington’s

       obligation to attempt a face-to-face meeting with Gaeta had arisen. It was also

       over a year and a half since Gaeta had returned from active duty and was still

       delinquent in his payments. Thus, even if we excuse Huntington’s inaction

       during Gaeta’s active duty, it ignored the requirements of the HUD regulations

       for months after his return. Even under our highly deferential standard of

       review, i.e., considering only the evidence favorable to the trial court’s

       judgment, we can only conclude that Huntington clearly did not comply with

       the explicit requirements of 24 C.F.R. § 203.604. The trial court clearly erred in

       concluding otherwise.


[37]   Nevertheless, Huntington argues on appeal that it “substantially complied”

       with the intent of this regulation. Huntington acknowledges that Lacy-McKinney

       held that compliance with the face-to-face meeting requirement contained in 24

       C.F.R. § 203.604 is a condition precedent to foreclosure but claims that Lacy-

       McKinney did not explain “how a mortgagee’s performance of such a condition

       precedent should be measured.” Appellee’s Br. at 33. Huntington contends that

       the question of whether a mortgagee bank complied with this section should be

       left to the discretion of the trial court, sitting in equity. Huntington correctly

       notes that foreclosure is an equitable proceeding. However, this court in Lacy-

       McKinney held that non-compliance with HUD regulations is not merely an

       equitable defense; instead, the court concluded that compliance was a condition

       precedent to foreclosure. Lacy-McKinney, 937 N.E.2d at 863. Thus, we reject


       Court of Appeals of Indiana | Memorandum Decision 18A-MF-408 | June 24, 2019   Page 20 of 25
       Huntington’s argument that we should consider its non-compliance in terms of

       equity.

[38]   With regard to Huntington’s argument that it substantially complied with the

       requirements of 24 C.F.R. § 203.604, Indiana courts have long recognized that

       substantial compliance with a statutory mandate is sufficient if the act of

       compliance accomplishes the essential purpose of the statute. Lewis v. Bd. of Sch.

       Trs. of Charles A. Beard Mem’l Sch. Corp., 657 N.E.2d 180, 183 (Ind. Ct. App.

       1995), trans. denied. Here, however, the trial court made no findings regarding

       substantial compliance. Nor are we entirely sure that the doctrine of substantial

       compliance is applicable, as HUD has made it clear that its intent is that “no

       mortgagee shall commence foreclosure or acquire title to a property until the

       requirements of this subpart [which contains the 24 C.F.R. § 203.604] have

       been followed.” 24 C.F.R. § 203.500.

[39]   But even assuming that substantial compliance would be sufficient, we are

       unable to agree with Huntington that it did, in fact, substantially comply with

       the requirements of 24 C.F.R. § 203.604. The purpose of 24 C.F.R. § 203.604 is

       to require a mortgage bank to have a meeting, in person, with an FHA

       mortgagor before the mortgagor becomes several months delinquent in his or her

       mortgage payments. It is clear that HUD has signaled its intent that banks

       issuing FHA-guaranteed mortgages must do more than a mortgagee bank for a

       non-FHA guaranteed mortgage to help the mortgagor avoid foreclosure. One of

       the things a bank holding such a mortgage must do is attempt to have a face-to-

       face meeting with the mortgagor before the mortgagor becomes more than three

       Court of Appeals of Indiana | Memorandum Decision 18A-MF-408 | June 24, 2019   Page 21 of 25
       months behind in his or her payments. Early intervention is clearly the goal of

       this regulation.

[40]   Here, however, Huntington made no effort to have any sort of meeting until

       well after Gaeta was more than three months behind in his mortgage payments.

       When Gaeta made no payment in July 2009, he became four months behind in

       his payments. All Huntington did was telephone Gaeta and attempt to set up a

       repayment plan. Again, however, this was after Gaeta was more than three

       months behind in his payments, and the applicable HUD regulations require a

       face-to-face meeting before the mortgagor becomes more than three months

       behind in his or her payments. As noted above, Huntington did not even

       attempt to set up a face-to-face meeting until six years after Gaeta first became

       more than three months behind in his payments. This was also over one year

       after Gaeta had returned from the Marines and was still months behind in his

       payments. By the time it sent an offer for a face-to-face meeting, Huntington

       had already informed Gaeta of its intent to foreclose and had even initiated the

       Prior Foreclosure Action. Under these facts and circumstances, we cannot say

       that Huntington substantially complied with the requirements of 24 C.F.R. §

       203.604.6




       6
         This is not to say that, under different circumstances, failure by a mortgagee lender to comply with the
       request for a face-to-face meeting requirement, would necessarily prevent a later foreclosure action against a
       mortgagor, like Gaeta. And in this case, as discussed below, Huntington retains its money judgement against
       Gaeta, with all of the common post-judgement collection remedies available to it, including levy of
       execution. Indeed, Huntington’s judgement became a lien against the property as of the date of its entry,
       pursuant to Indiana Code section 34-55-9-2.

       Court of Appeals of Indiana | Memorandum Decision 18A-MF-408 | June 24, 2019                     Page 22 of 25
[41]   Huntington also argues that Gaeta was not prejudiced by its failure to comply.

       However, the cases cited by Huntington in support of this argument all involve

       breach-of-contract claims brought by a mortgagor seeking monetary damages

       against a mortgagee bank for failure to comply with the incorporated HUD

       regulations. See e.g., Njema v. Wells Fargo Bank, N.A., 124 F. Supp. 3d 852 (D.

       Minn. 2015). Here, Gaeta has brought no breach-of-contract action seeking

       monetary damages against Huntington and argues only that the 24 C.F.R. §

       203.604 is a condition precedent to foreclosure that Huntington failed to satisfy.

       And the question in this case is not whether Gaeta suffered any damages, but

       whether Huntington complied with a condition precedent to foreclosure.


[42]   Huntington also contends that Gaeta’s situation would be no different if

       Huntington had complied with the face-to-face meeting requirement. But this is

       akin to proving a negative. There is no way we can know whether an early

       intervention would have prevented Gaeta’s continued delinquencies.


[43]   In short, even considering only the evidence favorable to the trial court’s

       decision, this evidence clearly shows that Huntington failed to strictly comply

       with the requirements of 24 C.F.R. § 203.604. Nor did Huntington’s actions

       constitute substantial compliance with the face-to-face meeting requirement.

       Thus, Huntington failed to comply with a condition precedent to foreclosure.

       To the extent that the trial court concluded otherwise, this was clearly

       erroneous. We therefore reverse the trial court’s judgment granting

       Huntington’s action to foreclose on the mortgage.



       Court of Appeals of Indiana | Memorandum Decision 18A-MF-408 | June 24, 2019   Page 23 of 25
[44]   Our holding may seem to be harsh to Huntington. But, under the FHA,

       mortgagee banks, like Huntington “are induced to make essentially risk-free

       mortgages by being guaranteed against loss in the event of default by the

       mortgagor.” Lacy-McKinney, 937 N.E.2d at 860 (citing Anderson, 701 F.2d at

       113–14). In exchange, the mortgagee must comply with HUD-promulgated

       regulations, including the responsibilities set forth in 24 C.F.R. § 203.604. Lacy-

       McKinney, 937 N.E.2d at 860. And as this court held in Lacy-McKinney,

       compliance with these regulations is a condition precedent to foreclosure, as

       HUD has made very clear. Id. at 861 (citing 24 C.F.R. § 203.500 (“It is the

       intent of [HUD] that no mortgagee shall commence foreclosure or acquire title

       to a property until the requirements of this subpart [C] have been followed.”).

       The failure to comply with these conditions precedent is an affirmative defense

       to foreclosure. Id. at 864. Huntington wants to “have its cake and eat it too,”

       i.e., obtain the benefits of the reduced risk of loss on FHA-guaranteed loans, but

       still be able to foreclose despite its clear failure to comply with the HUD-

       promulgated regulations.

[45]   That having been said, we do agree with Huntington that, even if it is

       prohibited from seeking foreclosure due to its failure to abide by the applicable

       HUD regulations, this does not mean that the money judgment in favor of

       Huntington is improper. Gaeta’s failure to pay the loan secured by the

       mortgage was clearly established. And the failure to comply with the HUD

       regulations is an affirmative defense to foreclosure. But this does not mean that




       Court of Appeals of Indiana | Memorandum Decision 18A-MF-408 | June 24, 2019   Page 24 of 25
       Huntington is not entitled to a money judgment on the loan based on Gaeta’s

       failure to pay.


                                                  Conclusion

[46]   Accordingly, we reverse the judgment of the trial court to the extent that it

       granted Huntington’s request to foreclose on the mortgage.7 But we affirm the

       trial court’s money judgment in favor of Huntington on the unpaid balance of

       the Loan.


[47]   Affirmed in part, reversed in part, and remanded for proceeding consistent with

       this opinion.


       Vaidik, C.J., and Crone, J., concur.




       7
        Because of our conclusion, we need not address the remainder of Gaeta’s arguments, all of which attack the
       propriety of the foreclosure.

       Court of Appeals of Indiana | Memorandum Decision 18A-MF-408 | June 24, 2019                  Page 25 of 25
