Creditors' Rights Blog

The North Carolina Court of Appeals has raised another roadblock for lenders seeking to recover a debt where the original note has been lost.  In Emerald Portfolio, LLC v. Outer Banks/Kinnakeet Associates, LLC et al., 2016 WL 4598561 (N.C.App. 6 September 2016), the Court held that a party who never possessed a note cannot avail itself of North Carolina’s version of the UCC to enforce the note.
The North Carolina General Assembly ended its 2016 legislative session in July and placed some new laws on the statute books that of which servicers and companies that manage REO assets should be aware. Foreclosure Squatters
In a case of first impression for the United States Court of Appeals for the Ninth Circuit, and as the first published opinion in any circuit court, the Court in Hernandez v. Williams, --- F.3d ---, 2016 WL 3913445 (9th Cir. July 20, 2016) held that even when a debt collector has already sent the consumer the debt validation notice required by 15 U.S.C. § 1692g, a successor debt collector collecting the same debt who fails to send a new notice to the consumer within 5 days of the successor’s initial communication with the consumer violates § 1692g.
There is no statutory authority in North Carolina with respect to the right of a lender, mortgagee or beneficiary (“lender”) under a deed of trust to enter a secured property or take action to preserve, repair or re-key a secured property, or to otherwise exercise possession, dominion or control over the secured property.
Recent Appellate Decision Is Favorable to Foreclosing Note Holder and Its Law Firm But Leaves Open Whether Discovery Is Permissible in a Foreclosure
Late Fees:  Complying with North Carolina Law and Collecting Late Fees in a Reinstatement Context Collectability of Late Fees  Presuming that the applicable loan documents permit the note holder to seek late charges for the failure to timely remit the periodic loan payment, and almost all promissory notes will likely contain language similar to that found in the Fannie Mae/Freddie Mac Multistate Fixed Rate Note (“GSE Note”)1, late fees are collectable conditioned on compliance with state law.
Servicer’s Attorney’s Failure to Send Compliant Debt Validation Notice May a Make Servicer Vicariously Liable for FDCPA Violation
Recently, the United States Court of Appeals for the Second Circuit vacated the dismissal of a complaint alleging a violation of 15 U.S.C. § 1692e when a debt collector that notified consumers of their account balance failed to disclose that the balance may increase due to interest and costs.  Avila v. Riexinger, 2016 WL 1104776 (2d Cir. March 22, 2016).  The Second Circuit oversees Connecticut, New York and Vermont.
The Court of Appeals, in In re Lucks, 2016 WL 1321155 (N.C.App. April 5, 2015), affirmed that the evidentiary standards applicable to a secured creditor seeking to establish its right to foreclose a property secured by a deed of trust in a power-of-sale proceeding are less rigorous than they would otherwise be in ordinary civil litigation.  While the decision is unremarkable, the Court took the opportunity to address the evidentiary burden the creditor must meet, hence reviewing the decision is a valuable educational exercise.
Federal Courts Divided On Whether Failure to Warn Consumer of Expected Increase in Debt Amount May Violate FDCPA Recently, the United States Court of Appeals for the Second Circuit vacated the dismissal of a complaint alleging a violation of 15 U.S.C. § 1692e when a debt collector that notified consumers of their account balance failed to disclose that the balance may increase due to interest and costs.  Avila v. Riexinger, 2016 WL 1104776 (2d Cir. March 22, 2016).  The Second Circuit oversees Connecticut, New York and Vermont.

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