A recent decision by the Georgia Court of Appeals helps to add further clarity to the state’s foreclosure notice statute. The statute, which was amended in 2008, requires that the written notice of a foreclosure sale “shall include the name, address, and telephone number of the individual or entity who shall have full authority to negotiate, amend, and modify all terms of the mortgage with the debtor.” The Court of Appeals determined that a loan servicer who holds the security deed has such authority.
In Reese v. Provident Funding Associates, LLP, the plaintiffs alleged that the foreclosure notice sent by the lender did not comply with Georgia law. While the lender later sold the promissory note to a third party, the lender remained the servicer of the loan and the grantee on the security deed. As a result, the lender retained the authority to collect payments and perform all other mortgage servicing functions authorized by the security deed.
After the borrowers defaulted, the lender sent a notice of foreclosure sale and identified itself as the party with “full authority to negotiate, amend, and modify” the mortgage. The Court of Appeals unanimously held that the lender had the necessary authority to negotiate, amend, and modify the mortgage, even though a third party owned the promissory note, as the servicer and grantee on the security deed. Accordingly, the court held that the foreclosure notice complied with Georgia law and affirmed the grant of summary judgment in favor of the lender.
This ruling follows the Georgia Supreme Court’s landmark decision last year in You v. JP Morgan Chase Bank, N.A., which clarified a number of issues related to Georgia’s foreclosure notice statute. The Supreme Court, however, did not address the meaning of the “full authority to negotiate, amend, and modify” requirement. As a result, litigants challenging the validity of foreclosure sales regularly allege that servicers who do not own the promissory note do not have “full authority” to negotiate on the mortgage loan, as required by Georgia law, and therefore sent an invalid notice of foreclosure sale. The decision in Reese provides some much-needed guidance and may discourage future litigation regarding this issue.