Short on time? Lenders face increased dismissals

In North Carolina, original jurisdiction over power of sale foreclosure hearings rests with the Clerk of Superior Court in the county where the secured property is located.  After years of bulging dockets and responsibilities in other areas growing, Clerks of Court and their Assistant Clerks are looking for ways to move cases and clear off their dockets.  As a result, current trends show an increase in dismissals at all stages of the foreclosure process.  

In most counties, Clerks are expecting greater levels of perfection from Lenders, Servicers, Trustees and their attorneys.  What does this mean for default servicing?  Lenders and Servicers must provide the documentation necessary to prosecute the foreclosure promptly following referral.  In particular, affidavits of indebtedness must be provided prior to scheduled hearing dates.  Over the past five years most courts would grant multiple continuances for the lender/servicer to provide the Trustee with necessary documents and affidavits for the foreclosure hearing almost automatically.  Not anymore.  The emerging trend shows courts unwilling in many cases to grant even a single continuance if everything is not in order to proceed with the foreclosure hearing as scheduled.

Also affecting this trend towards dismissal is an increased unwillingness to continue cases for loss mitigation.  Typically when the debtor and lender/servicer both represent to the court that they are exploring non-foreclosure resolution of the default, the courts have been willing to oblige the parties and continue scheduled foreclosure hearings to a future date to see if these efforts are successful.  Under NC Gen Stat 45-21.16C, where the mortgage is secured by the debtor’s primary residence, Clerks are required to inquire as to whether efforts are being made to resolve the matter voluntarily before proceeding.  In addition, Clerks are empowered to order the hearing continued to a date and time certain not more than 60 days from the date scheduled for the original hearing when there is good cause.  Nevertheless, there is a growing trend of Clerks not granting continuances in these situations and forcing the lender/servicer to face the difficult choice of moving forward with the foreclosure hearing or accepting a dismissal of the matter altogether.  In some instances, Clerks are also dismissing cases where the Order permitting the foreclosure sale has been granted but the lender/servicer has delayed or suspended the sale while attempting to work with the debtor.  

While it’s clear that lenders and servicers have less time to complete prosecution of foreclosure actions than in times past, it’s also possible to see the way ahead.  Lenders, Servicers, Trustees and their attorneys must continue to do excellent work and always be prepared to move forward with the court process.  They also need to be ready to file an appeal, when necessary, should a dismissal be handed down untimely.