FOR PUBLICATION



ATTORNEY FOR APPELLANT:                       ATTORNEYS FOR APPELLEE:

GREGORY A. STOUT                              DAVID PESEL
Reisenfeld & Associates, LPA LLC              MARCY WENZLER
Cincinnati, Ohio                              Indiana Legal Services, Inc.
                                              Bloomington, Indiana

                                                                             FILED
                                                                         Apr 05 2012, 9:01 am
                             IN THE
                   COURT OF APPEALS OF INDIANA                                   CLERK
                                                                               of the supreme court,
                                                                               court of appeals and
                                                                                      tax court




GMAC MORTGAGE, LLC,                           )
                                              )
      Appellant-Plaintiff,                    )
                                              )
             vs.                              )     No. 28A04-1107-MF-404
                                              )
RONALD GLENN DYER,                            )
                                              )
      Appellee-Defendant.                     )
                                              )


                    APPEAL FROM THE GREENE SUPERIOR COURT
                         The Honorable Dena A. Martin, Judge
                            Cause No. 28D01-1001-MF-33



                                    April 5, 2012

                             OPINION - FOR PUBLICATION

VAIDIK, Judge
                                          Case Summary

       Ronald Glenn Dyer had an FHA-insured loan that he defaulted on. Dyer and

GMAC Mortgage, LLC, attended a settlement conference at which they agreed to

proceed with a deed in lieu of foreclosure. After the settlement conference, GMAC

drafted a written agreement.          The agreement included a provision using language

required by the U.S. Department of Housing and Urban Development (HUD) that neither

GMAC nor HUD would pursue a deficiency judgment against Dyer. Dyer, however, was

not happy with this provision because he did not think that it gave him enough protection.

Accordingly, he refused to sign the agreement. Instead, Dyer wanted the agreement to

provide that he was released from all personal liability. The trial court agreed with Dyer

and ordered GMAC to rewrite the agreement. Because under federal law and HUD

regulations deeds in lieu of foreclosure release the borrower from any obligation under

the mortgage, the standard language used by GMAC was sufficient to release Dyer from

all personal liability. We therefore reverse the trial court.

                                  Facts and Procedural History

       On November 14, 2008, Dyer and his now-deceased wife Ella Faye Dyer1

executed a note in the principal amount of $74,277.00 with Lend America for their

Greene County, Indiana, home. The loan was an FHA-insured loan subject to federal

statutes and HUD regulations.           To secure payment of the note, Dyer and his wife

executed a mortgage. The mortgage was eventually assigned to GMAC. Dyer later

defaulted under the terms of the note and mortgage.


       1
           The record shows that Dyer’s wife passed away on November 19, 2009.

                                                  2
        On January 19, 2010, GMAC filed a Complaint on Note and to Foreclose

Mortgage. Dyer filed an answer and counterclaim, and GMAC filed an answer to Dyer’s

counterclaim.      In addition, GMAC informed Dyer of his right to participate in a

settlement conference, which is now required by Indiana law. See Ind. Code § 32-30-

10.5-8. Dyer requested a settlement conference,2 and the trial court scheduled one for

June 24, 2010. See id. § 32-30-10.5-10.

        At the settlement conference, the parties decided to proceed with a deed in lieu of

foreclosure. This is one of many options available to a defaulting homeowner. As one

treatise explains:

        Often the parties to a mortgage prefer to avoid normal foreclosure
        procedures. This can be accomplished if the mortgagor is willing to convey
        the secured property to the mortgagee as a substitute for foreclosure. In
        turn, the mortgagor in default is completely excused from the underlying
        obligation. The parties cannot promise in the original note and mortgage
        documents to resolve a default in this manner. Any such provision would
        be an unacceptable clog on the mortgagor’s equity of redemption. After
        default occurs, however, the parties are permitted to resolve their
        relationship by means of a deed in lieu of foreclosure.




        2
         The Indiana Supreme Court has provided a great resource for help with mortgage foreclosures,
settlement conferences, and deeds in lieu of foreclosure. See Indiana Supreme Court, Help with Mortgage
Foreclosures, http://www.in.gov/judiciary/self-service/2359/htm (last visited Mar. 2, 2012). Specifically,

        A settlement conference is a face-to-face meeting with your lender’s representative. It is
        your last chance to work out a deal with your lender before a foreclosure takes place. If a
        foreclosure takes place, you will lose your home and your credit rating will be damaged.
        However, a settlement conference is not a guaranteed workout between you and your
        lender!

Id.

                                                    3
4 Powell on Real Property § 37.44[1] (Michael Allan Wolf ed., 1997) (footnotes

omitted).3

        On December 30, 2010, GMAC sent Dyer a deed in lieu of foreclosure agreement

to sign and return. Appellant’s App. p. 113.4 The agreement provided, in pertinent part:

        10. Provided all terms and conditions of this Agreement are met and this
        transaction concluded, GMAC Mortgage, LLC, agrees that neither it nor
        the U.S. Department of Housing and Urban Development [will] pursue a
        deficiency judgment from the Mortgagor.

Id. at 118. GMAC gave Dyer a January 10, 2011, deadline. Id. at 113. Because Dyer

did not believe that paragraph 10 released him from personal liability nor complied with

HUD regulations, he never signed and returned the agreement.

        Instead, on February 4, 2011, Dyer requested leave to supplement his answer to

GMAC’s complaint as well as a declaratory judgment. Id. at 48. The request provides,

in relevant part:

        8. On June 24, 2010, the Plaintiff and Mr. Dyer had a settlement conference
        pursuant to I.C. 32-30-10.5-8(c) by telephone. The Plaintiff agreed to
        accept a deed in lieu of foreclosure from Mr. Dyer in exchange for a release
        of personal liability.

        9. On September 17, 2010, Mr. Dyer’s counsel, by email, confirmed Mr.
        Dyer’s agreement to move out of his home in exchange for delivering a


        3
         According to our Supreme Court’s website, borrowers who do not want to keep their home may
pursue a deed in lieu of foreclosure. A deed in lieu of foreclosure allows:

                Giving the home back to the lender; owner is allowed to walk away from the
                 home with permission of the lender

                Helps avoid damage to credit caused by foreclosure/bankruptcy.

See supra note 2.

        We actually refer to Appellant’s Amended Appendix, but for the sake of simplicity we cite it as
        4

“Appellant’s App.”
                                                   4
        deed in lieu of foreclosure including a specific waiver of any deficiency
        owed.

        10. On September 20, 2010, Matt Wach, a Legal Loss Mitigation Analyst
        for GMAC, by email, agreed to the confirmation.

        11. On October 4, 2010, in reliance on Plaintiff’s agreement to accept a
        deed in lieu of foreclosure that released him from liability, Mr. Dyer moved
        out of his home of 21 years.

        12. Plaintiff delayed until November 30, 2010 to send to Mr. Dyer drafts of
        Plaintiff’s deed in lieu documents which consisted of an Agreement (setting
        forth terms of the deed in lieu arrangement), a General Warranty Deed, an
        Estoppel Affidavit and (a later emailed) Conditional Delivery of Deed
        (hereinafter, collectively the “DIL Documents”).

        13. The DIL Documents provided by the Plaintiff do not release Mr. Dyer
        from personal liability.

        14. The DIL Documents including this misleading provision about not
        pursuing a deficiency judgment:

        Provided all terms and conditions of this Agreement are met and this
        transaction concluded, GMAC Mortgage, LLC agrees that neither it nor the
        U.S. Department of Housing and Urban Development [will] pursue a
        deficiency judgment from the Mortgagor.

        15. The above provision is misleading because pursuant to The Deficit
        Reduction Act of 1984 . . ., HUD does not need to get a deficiency
        judgment to collect from Mr. Dyer.

        16. Mr. Dyer’s counsel, by email of January 10, 2011, notified Plaintiff that
        the DIL Documents were unsatisfactory and did not conform to HUD’s
        requirements.

Id. at 49-51.

        A few days later, GMAC filed a Supplemental Report of Settlement Conference

Results and Motion to Proceed with Foreclosure. Id. at 46. GMAC’s report advised the

court



                                             5
       that a telephonic Settlement Conference was held on June 24, 2010, in
       which Plaintiff, by counsel, and Defendant, Ronald Glenn Dyer
       individually and by counsel, appeared. The parties hereto attempted to
       negotiate a Deed-In-Lieu of foreclosure, however an agreement was never
       reached on the terms.
              Therefore, the Settlement Conference has resulted in no agreement
       or resolution and Plaintiff moves the Court for permission to proceed with
       the foreclosure action.

Id.

       The trial court held a telephonic conference to address the motions and granted

Dyer’s request for leave to supplement his answer. Id. at vi (CCS).5 The court gave

GMAC a deadline to respond. Id.

       On the deadline, GMAC filed its response to Dyer’s request for leave to

supplement its answer and request for declaratory judgment. Id. at 36. In its response,

GMAC alleged that contrary to Dyer’s allegations, it had “complied with all applicable

HUD regulations” and therefore GMAC “should not be compelled to reform their Deed

in Lieu Agreement for the Defendant.” Id. GMAC asked the court to enforce the

agreement the parties had already reached:

       In his Request for Declaratory Judgment, Defendant requests that this Court
       order the Plaintiff to add language to their Deed in Lieu Agreement stating
       that the Plaintiff has released Defendant from personal liability. Because
       the requested language is repetitive and unnecessary, Plaintiff requests that
       this Court deny the Defendant’s Request, and allow the Plaintiff and
       Defendant to proceed with the agreed-upon resolution of this case.

Id. (emphasis added) (footnote omitted); see also id. at 39 (“Plaintiff prays that the Court

find the Defendant’s Request for Declaratory Judgment unpersuasive and allow the deed

in lieu process to advance . . . .”).

       5
           GMAC did not number the CCS included at the beginning of its Appendix. It started using
roman numerals but stopped at iii. We use the corresponding roman numeral as if the numbering had
continued.
                                                6
      On April 15, 2011, Dyer filed a motion for judgment on the pleadings pursuant to

Indiana Trial Rule 12(C). The trial court granted Dyer’s motion four days later. The

order provides:

      The Court, having considered the same, now grants the Defendant’s
      Motion, and declares:

             1. The Plaintiff has not complied with HUD’s deed in lieu loss
             mitigation requirements.
             2. The deed in lieu agreement is a release from all personal liability
             of Defendant in connection with the Note and Mortgage at issue.

      The Court orders the Plaintiff:

             1. [W]ithin thirty (30) days of this Order, to deliver to Defendant’s
             counsel the Deed in Lieu documents and include in the Deed in Lieu
             Agreement the following additional language:

                    Upon execution and delivery by Mortgagor to GMAC
                    Mortgage, LLC of the documents referenced herein, the
                    Mortgagor is released from all personal liability in connection
                    with the Note and Mortgage.

             2. Within fifteen (15) days of receipt of the Deed in Lieu documents
             executed by Defendant, Plaintiff shall deliver to Defendant’s
             counsel:

                    a. fully executed copies of the Deed in Lieu documents, and
                    b. a certified, file-stamped copy of the deed indicating its
                    recordation with the Greene County Recorder’s Office.

Id. at 24-25. Although the trial court’s order does not say, the CCS entry explains that

the trial court treated Dyer’s motion for judgment on the pleadings as a motion for

summary judgment. Id. at vi.

      Apparently unaware that the trial court had already ruled, see Appellant’s

Amended Br. p. 7, GMAC filed a response to Dyer’s motion for judgment on the

pleadings two weeks later.

                                           7
        GMAC filed a motion to correct error, which the trial court denied. GMAC now

appeals.

                                      Discussion and Decision

        GMAC contends that the trial court improperly granted Dyer’s motion for

judgment on the pleadings. As indicated above, however, the trial court treated Dyer’s

motion as one for summary judgment. See Ind. Trial Rule 12(C) (“If, on a motion for

judgment on the pleadings, matters outside the pleadings are presented to and not

excluded by the court, the motion shall be treated as one for summary judgment and

disposed of as provided in Rule 56 . . . .”). We thus apply the summary judgment

standard of review.6

        When reviewing the entry or denial of summary judgment, our standard of review

is the same as that of the trial court: summary judgment is appropriate only where there is

no genuine issue of material fact and the moving party is entitled to a judgment as a

matter of law. Ind. Trial Rule 56(C); Dreaded, Inc. v. St. Paul Guardian Ins. Co., 904

N.E.2d 1267, 1269 (Ind. 2009). All facts established by the designated evidence, and all

reasonable inferences from them, are to be construed in favor of the nonmoving party.

Naugle v. Beech Grove City Sch., 864 N.E.2d 1058, 1062 (Ind. 2007).




        6
          The record is also clear that the parties asked the trial court to enforce their deed in lieu of
foreclosure agreement. See Appellant’s App. p. 36 (“Because the requested language is repetitive and
unnecessary, Plaintiff requests that this Court deny the Defendant’s Request, and allow the Plaintiff and
Defendant to proceed with the agreed-upon resolution of this case.”), 39 (“Plaintiff prays that the Court
find the Defendant’s Request for Declaratory Judgment unpersuasive and allow the deed in lieu process
to advance as the Plaintiff has fully complied with all HUD regulations and has graciously offered the
Defendant a more favorable solution to its default than the Plaintiff’s contractual right of foreclosure.”)
(emphases added). And both parties address motions to enforce settlement agreements on appeal. Even if
we addressed this case as a motion to enforcement a settlement agreement, our result would be the same.
                                                    8
       The facts are not in dispute. Importantly, the record shows that Dyer and GMAC

agree upon several things. First, Dyer and GMAC agree that they decided to proceed

with a deed in lieu of foreclosure at the settlement conference. See Appellant’s Reply Br.

p. 5 (“The record before the trial court is clear; the parties attended a settlement

conference and agreed to allow a deed in lieu of foreclosure on the property.”);

Appellee’s Br. p. 8 (“The parties agreed to resolve this foreclosure by the FHA loss

mitigation option known as deed in lieu of foreclosure . . . .”). Second, both parties agree

that a deficiency judgment cannot be sought against Dyer. Third, both parties agree that

Dyer may not be held personally liable for any deficiency. Finally, both parties agree

that the deed in lieu of foreclosure agreement must comply with federal law and HUD

regulations. Their point of contention is the exact language that must be included in the

deed in lieu of foreclosure agreement and whether the language used accomplishes their

joint purpose of ensuring that Dyer is not held personally liable for any deficiency.

Accordingly, we must determine whether GMAC’s deed in lieu of foreclosure agreement

precludes personal liability of Dyer under federal law and HUD regulations. The trial

court agreed with Dyer, but we agree with GMAC.

       Federal law provides protection to defaulting borrowers with FHA-insured loans

with HUD’s Loss Mitigation Program. 12 U.S.C.A. § 1715u(a) (Supp. 2011) provides

that upon default or imminent default, “mortgagees shall engage in loss mitigation

actions for the purpose of providing an alternative to foreclosure (including but not

limited to actions such as . . . deeds in lieu of foreclosure . . . .”). In addition, 24 C.F.R. §

203.501 (2011) provides that “[m]ortgagees must consider the comparative effects of


                                               9
their elective servicing actions, and must take those appropriate actions which can

reasonably be expected to generate the smallest financial loss to the Department. Such

actions include, but are not limited to, deeds in lieu of foreclosure under § 203.357 . . . .”

24 C.F.R. § 203.357 (2011), in turn, sets forth the requirements for a deed in lieu of

foreclosure:

       (a) Mortgagors owning one property. In lieu of instituting or completing a
       foreclosure, the mortgagee may acquire property from one other than a
       corporate mortgagor by voluntary conveyance from the mortgagor who
       certifies that he does not own any other property subject to a mortgage
       insured or held by FHA. Conveyance of the property by deed in lieu of
       foreclosure is approved subject to the following requirements:

               (1) The mortgage is in default at the time the deed is executed and
               delivered;
               (2) The credit instrument is cancelled and surrendered to the
               mortgagor;
               (3) The mortgage is satisfied of record as a part of the consideration
               for such conveyance;
               (4) The deed from the mortgagor contains a covenant which
               warrants against the acts of the grantor and all claiming by, through,
               or under him and conveys good marketable title;
               (5) The mortgagee transfers to the Commissioner good marketable
               title accompanied by satisfactory title evidence.

       According to HUD, “The Deed-in-Lieu of Foreclosure allows a mortgagor in

default, who does not qualify for any other HUD Loss Mitigation option, to sign the

house back over to the mortgage company. Ref: Mortgagee Letters 2000-05 and 2002-

13.” U.S. Department of Housing and Urban Development, Deed-in-Lieu of Foreclosure

Option, http://portal.hud.gov/fha/sf/svc/faqdilfact.pdf. The specific requirements include

an “[a]cknowledgment that mortgagor(s) who complies with all of the requirements of

the Agreement shall not be pursued for deficiency judgments.” Id. As noted above, this

document references Mortgagee Letter 00-05, which HUD issued on January 19, 2000.

                                             10
The purpose of Mortgagee Letter 00-05 “is to announce clarifications of policy and

procedural changes in FHA’s Loss Mitigation Program and provide an updated

consolidation of the existing program guidance.” U.S. Department of Housing and Urban

Development,            Mortgagee          Letter          00-05   (Jan.   19,       2000),

http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/nsc/lmmltrs

(follow 00-05 hyperlink). This letter provides:

      Deed-in-lieu of foreclosure (DIL) is a disposition option in which a
      borrower voluntarily deeds collateral property to HUD in exchange for a
      release from all obligations under the mortgage. Though this option results
      in the borrower losing the property, it is usually preferable to foreclosure
      because the borrower mitigates the cost and emotional trauma of
      foreclosure and is eligible to receive borrower’s consideration of $500.[7]
      Also, a DIL is generally less damaging than foreclosure to a borrower’s
      ability to obtain credit in the future. DIL is preferred by HUD because it
      avoids the time and expense of a legal foreclosure action, and due to the
      cooperative nature of the transaction, the property is generally in better
      physical condition at acquisition.

Id. at 35 (emphasis added). In addition, the letter explains that the lender and mortgagor

must execute a written deed in lieu of foreclosure agreement that contains all of the

conditions under which the deed will be accepted, including an “[a]cknowledgment that

borrowers who comply with all of the requirements of the agreement shall not be pursued

for deficiency judgments.” Id. at 37.

      HUD regulations are clear: a deed in lieu of foreclosure releases the borrower

from all obligations under the mortgage and the deed in lieu of foreclosure written

agreement must contain an acknowledgement that the borrower shall not be pursued for

deficiency judgments.        GMAC’s proposed agreement contains the precise language


      7
          This amount has since been increased to $2000.
                                                  11
required by HUD. Accordingly, GMAC’s proposed agreement releases Dyer from all

obligations under the mortgage. See Mortgagee Letter 00-05 at 35 (“Deed-in-lieu of

foreclosure (DIL) is a disposition option in which a borrower voluntarily deeds collateral

property to HUD in exchange for a release from all obligations under the mortgage.”

(emphasis added)). Further, a deed in lieu of foreclosure alone releases Dyer from all

obligations under the mortgage. This is in line with hornbook law, which explains that a

deed in lieu of foreclosure allows “default without incurring personal liability on the

note.” 4 Powell on Real Property § 37.44[1].

       Nevertheless, Dyer relies on a single federal district court opinion from 1999,

Ingram v. Cuomo, 51 F. Supp. 2d 667 (M.D. N.C. 1999), as support that the “shall not be

pursued for deficiency judgments” language is not protective enough because HUD may

be able to intercept any future tax refund due to Dyer, even without a deficiency

judgment, pursuant to the Deficit Reduction Act of 1984. We first note that Ingram came

before Mortgagee Letter 00-05. Moreover, Ingram does not apply to the facts in this

case. In Ingram, the borrower defaulted on her FHA-insured loan, the home was sold at a

loss, and HUD sent the borrower notice that it intended to intercept any tax refund due to

her in order to satisfy the balance owed. Id. at 669. In this case, however, Dyer and

GMAC avoided foreclosure by agreeing to proceed with a deed in lieu of foreclosure.

This type of agreement clearly provides that the borrower cannot be pursued for

deficiency judgments. Accordingly, Ingram does not impact the language that must be

included in a deed in lieu of foreclosure agreement.




                                            12
       Because GMAC’s proposed deed in lieu of foreclosure agreement releases Dyer

from all personal liability and complies with HUD regulations, we reverse the trial

court’s summary judgment order that GMAC did not comply with HUD regulations and

therefore must revise the agreement. As a result, the parties shall proceed with the deed

in lieu of foreclosure agreement as proposed by GMAC.

       Reversed and remanded.

NAJAM, J., concurs.

ROBB, C.J., concurs in part, dissents in part with separate opinion.




                                            13
                             IN THE
                   COURT OF APPEALS OF INDIANA

GMAC Mortgage, LLC,                       )
                                          )
       Appellant-Plaintiff,               )
                                          )
        vs.                               )        No. 28A04-1107-MF-404
                                          )
RONALD GLENN DYER                         )
                                          )
       Appellee-Defendant.                )



ROBB, Chief Judge, concurring in part, dissenting in part

       I concur in the majority’s determination that a deed in lieu of foreclosure releases

a borrower from any obligation under a mortgage pursuant to federal law and HUD

regulations. However, I respectfully dissent from the majority’s resolution of the case.

       The majority laid out several facts that are not in dispute. Both parties agree they

decided to pursue a deed in lieu of foreclosure after attending a settlement conference, a

deficiency judgment cannot be sought against Dyer, Dyer cannot be held personally

liable, and the deed in lieu of foreclosure must comply with federal law and HUD

regulations. See slip op. at 9. At issue is Dyer’s request to have a provision in the deed

in lieu of foreclosure agreement stating he is released from personal liability. GMAC

contends the provision it included in its draft of the agreement stating neither GMAC nor

HUD will pursue a deficiency judgment from Dyer is sufficient.
                                              14
       Although I find no reason to disagree with the majority that a deed in lieu of

foreclosure releases a borrower from liability as a matter of law,8 what would be the harm

in including Dyer’s requested provision? If a deed in lieu of foreclosure does in fact

release a mortgagor from personal liability and if everyone agrees Dyer should be

released from personal liability, the requested provision would only clarify this reality.

HUD regulations do not prohibit parties adding language in addition to what is required,

and Dyer is not attempting to remove a provision required by HUD. For these reasons, I

would affirm the trial court’s grant of summary judgment requiring a revision of the

agreement to include Dyer’s requested provision. In all other respects, I concur with the

majority.




       8
           It is worth noting, however, that GMAC chose to litigate against Dyer’s requested provision
rather than merely agreeing to its addition to the agreement. While GMAC certainly had the right to
respond to Dyer’s request for declaratory judgment and argue its drafted agreement was sufficient, this
route would almost certainly be less cost-effective. If GMAC truly intends to not hold Dyer personally
liable in any manner, this extra cost would serve no purpose.
                                                  15
