G.E. Capital Mortgage Servs., Inc. v. Levenson

G.E. Capital Mortgage Servs., Inc. v. Levenson, 338 Md. 227, 657 A.2d 1170 (1995) was a post-foreclosure sale case in which the refinance lender purchased the property at foreclosure. The holding of the Court of Appeals addressed two questions, both of which involved the foreclosure sale. Id. at 237. In Levenson, id. at 233, 235, after the foreclosure sale had been ratified, Levenson, a creditor, filed a petition in the foreclosure action seeking a determination that his three previously obtained confessed judgments had priority over the lender's deed of trust. G.E. Capital Mortgage Services, the lender, had refinanced an existing deed of trust and successfully bid for the property at the foreclosure sale. Id. at 234-35. The Court of Appeals held, inter alia, that the creditor's "actual knowledge in advance of the foreclosure sale that the sale would be held, his opportunity to bid, and his opportunity to litigate the applicability of equitable subrogation before distribution of the sale proceeds fully satisfied the requirements of due process under the facts of this case." Id. at 246-47. Read appropriately, Levenson applies to refinance lenders who, after a foreclosure sale, obtain a position of priority for a refinanced deed of trust over other judgment holders. Levenson is not dispositive where a refinance lender invokes the doctrine of equitable subrogation prior to the foreclosure sale, against a party, such as appellant, who claims to have been wrongfully deprived of title. In Levenson, 338 Md. at 237, the Court of Appeals stated that the petition for certiorari raised the following two questions: (1) "Whether intervening judgment liens are extinguished when the amount bid at the foreclosure sale does not exceed the portion of the debt entitled to be equitably subrogated to the first priority position of the refinanced deed." (2) "Whether the right to equitable subrogation to the priority position of a refinanced deed of trust must be established prior to the foreclosure sale in a power of sale foreclosure either by declaratory judgment or ruling in the foreclosure case if the foreclosure is to extinguish an intervening judgment."