Court of Appeals of Georgia recently handed down an opinion of concern to the mortgage industry

The Court of Appeals of Georgia recently handed down an opinion of concern to the mortgage industry, Reese v. Provident Funding Associations, LLP, 2012 WL 2849700. The court read the Georgia foreclosure statute (OCGA § 44-14-162.2) to require that a notice of foreclosure must disclose the identity of the secured creditor. "Upon considering the statute in its entirety, as well as the legislative intent, we conclude that the statute does require 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."

The Court of Appeals noted that the case is one of first impression, and relied upon a recent federal court decision, Stubbs v. Bank of America, 2012 WL 516972, in which the court addressed the intent of the Georgia legislature in a diversity case. "We agree with the federal court that the intent of the 2008 amendments was transparency in the foreclosure process. As such, this Court concludes that the true identity of the secured creditor must be included in the notice of foreclosure sale. Nothing in OCGA § 44-14-162.2(a) would preclude the identification of both the secured creditor and the entity with the authority to negotiate, amend, and modify the mortgage." Because the notice under review did not identify the secured creditor, the court reversed the trial court's grant of summary judgment to the mortgage servicer.

In addition, the court directed the trial court to enter judgment in favor of the borrowers on their claim for wrongful foreclosure. The court appears to have held that an invalid foreclosure is a wrongful foreclosure, despite that wrongful foreclosure is a tort claim, the elements of which are duty, breach, causation, and damage.

Mortgage lenders, services, and counsel will want to consider this decision and its impact on foreclosure notices in Georgia.