Creditors' Rights Blog

When Typos Aren’t Enough to Give a Homeowner a ‘Free House'
In a recent opinion, the NC Court of Appeals in In the Matter of the Foreclosure of a Deed of Trust executed by Adams affirmed the trial court’s order permitting foreclosure despite the homeowner’s assertion that the petitioner failed to give proper notice of the foreclosure proceeding or establish that it was the holder of the debt.  The relevant facts of Adams are as follows:
The North Carolina Supreme Court issued a landmark decision in the case of In re Foreclosure of Lucks, No. 162A16 (December 21, 2016).  The Court’s opinion definitively states that the Rules of Civil Procedure do NOT apply to North Carolina power of sale foreclosures and ends a torrent of recent litigation that sought to convert North Carolina’s streamlined, contractual procedure into full-blown litigation.
Lately, creditors have been losing sleep over lost or misplaced promissory notes and how to go about enforcing their rights to collect on the underlying debt. Such a scenario puts the creditor in the awkward position of having a ticket to the show, but no way of getting to the theater. Will I be able to foreclose? Will the action have to be in front of a judge? What do I have to prove to entitle me to an order for sale?
In an unpublished opinion, the NC Court of Appeals in Dawkins v Wilmington Trust Company had to determine whether certain issues raised in a lawsuit were collaterally estopped by a prior foreclosure order.  The substitute trustee filed a special proceeding to foreclose on Mr. and Mrs. Dawkins’ real estate.  Prior to the foreclosure hearing, the foreclosing lender faxed Mr. and Mrs. Dawkins a copy of their promissory note with an attached allonge.
In a published decision from the North Carolina Court of Appeals, the Court again rejected a debtor’s challenge to a foreclosing lender’s affidavit in In re Foreclosure of Collins, No. COA16-655 (N.C. Ct. App. February 7, 2017).  This opinion offers guidance on the best practices of affidavit preparation and execution for North Carolina foreclosures under power of sale.
The South Carolina Court of Appeals has issued another case emphasizing the importance of following the service by publication statutes in order to obtain jurisdiction over the party being served. Previously, the S.C. Court of Appeals issued its decision in Caldwell v. Wiquist, 402 S.C. 565,741 S.E.2d 583 (Ct. App. 2013) establishing that affidavits requesting service by publication that are defective and do not meet the requirements of the publication statute will not be sustained even in the absence of fraud or collusion.
Individual Chapter 11 cases present many challenges to mortgage servicers, but one which creates continuing challenges is determining when a loan may be closed from bankruptcy and returned to general servicing following confirmation.  Upon plan implementation, many servicers seek to remove the bankruptcy hold as quickly as possible.  But determining when a servicer may safely do so without running afoul of the automatic stay, the confirmation order, or the discharge injunction, is often a vague and difficult analysis which many servicers are unable, or unwilling, to undertake.
Over the last two years, the Bankruptcy Court in the District of South Carolina has seen a proliferation of post-confirmation, mortgage loan modifications in Chapter 13 cases.  To address this issue, the Judges in this District have taken steps to clarify the process of obtaining court approval for these modifications to varying degrees.  The most comprehensive process has been outlined by Judge John E. Waites in his Chambers Guidelines regarding Loss Mitigation/Mortgage Modification.
In an action against several defendants, the Court just granted opposing counsel’s motion for summary judgment or motion to dismiss as to one but not all of the defendants.  There are a number of things going through your mind.  How am I going to deliver this news to the client?  What is my litigation strategy moving forward? How does this affect the overall likelihood of success?  Do I appeal the decision?