Ronald Glenn Dyer (defendant) defaulted on his Federal Housing Administration (FHA)-insured mortgage, and GMAC Mortgage, LLC (GMAC) (defendant), the original mortgagee's assignee, sued to foreclose. At the settlement conference required by Indiana law, GMAC proposed taking title to Dyer's property through a deed in lieu of foreclosure. Both GMAC and Dyer agreed that such a deed would protect Dyer against a deficiency judgment or liability for any deficiency, but they disagreed over what words the deed should use to describe this protection. GMAC's draft used a standard clause, approved by the federal Department of Housing and Urban Development (HUD), stating that neither GMAC nor HUD would "pursue a deficiency judgment." Dyer feared that GMAC's language would leave him exposed to some form of personal liability. Dyer cited a 1999 case in which a federal court upheld HUD's right to offset a deficiency by intercepting the borrower's tax refund. The trial judge ruled in Dyer's favor and ordered GMAC to revise the deed so that, in addition to the HUD-approved language, it stated that execution of the deed would release Dyer "from all liability in connection with" the mortgage. GMAC appealed to the Indiana Court of Appeals.