GMAC Mortgage, LLC v. Dyer
Indiana Court of Appeals
965 N.E.2d 762 (2012)
After Ronald Dyer (defendant) defaulted on his FHA-insured mortgage, GMAC Mortgage (defendant, as the appellant contesting the trial court's order) proposed resolving the foreclosure through a deed in lieu of foreclosure using standard, HUD-approved language stating that neither GMAC nor HUD would "pursue a deficiency judgment"; Dyer, citing a 1999 case allowing HUD to offset a deficiency by intercepting a borrower's tax refund after a completed foreclosure sale, feared this language left him exposed to some residual personal liability and wanted broader release language added. The trial court agreed with Dyer and ordered GMAC to add language releasing Dyer "from all liability in connection with" the mortgage, and GMAC appealed.
Whether a mortgagee's use of standard, HUD-approved language stating it will not "pursue a deficiency judgment" is sufficient, by itself, to release a defaulting borrower from all personal liability under a deed in lieu of foreclosure.