4th Cir.: Stephens v. HSBC Mortgage- Ripeness to Preclude Foreclosure

Summary: Stephens fell delinquent on her mortgage with HSBC and, prior to HSBC taking any action, sought a declaratory judgment that her mortgage contract was void ab initio, as it contained a waiver of her appraisement rights under South Carolina Code § 29-3-680. (South Carolina Code § 29-3-680 provides that: In any real estate foreclosure proceeding a defendant against whom a personal judgment is taken or asked, whether he has theretofore appeared in the action or not, may within thirty days after the sale of the mortgaged property apply by verified petition to the clerk of court in which the decree or order of sale was taken for an order of appraisal.) Affirming the district court and following Horvath v. Bank of N.Y., 641 F.3d 617, 622 n.2 (4th Cir. 2011), the 4th Circuit held that as HSBC had not even threatened foreclosure the case was not ripe for adjudication as Stephens could not yet show a "‘controversy...presented in [a] clean-cut and concrete form.'" Ostergren v. Cuccinelli, 615 F.3d 263, 288 (4th Cir. 2010). Commentary: It should not be difficult to find another plaintiff that has been threatened with foreclosure under what is (or at least was) the form mortgage note from HSBC. It would also seem that Ms. Stephens could simply file bankruptcy and raise, perhaps in conjunction with the Trustee, the argument that the mortgage with the waiver is void ab initio. Asserting South Carolina state laws would likely, following Stern, cause the reference to the bankruptcy court to be withdrawn, putting the case back before the district court, but now ripe, as it presents a case or controversy impacting on the bankruptcy estate. For a copy of the opinion, please see: Stephens v. HSBC Mortgage- Ripeness to Preclude Foreclosure