N.C. Court of Appeals: In re Gray- Foreclosure does Require Showing that the Underlying Debt was not Illegal

The Homeowners argued that their mortgage closing was conducted by two non-attorneys, whose advice regarding their rights and obligations constituted the unauthorized practice of law under N.C.G.S. § 84-4. As such, relying on In re Foreclosure of a Deed of Trust Executed by Bradburn, 199 N.C. App. 549, 551, 681 S.E.2d 828 (2009), they argued that the contract was void and unenforceable.

In Bradburn, the Court of Appeals had found that a mortgage made by a broker unlicensed under N.C.G.S. § 53-243.03, was “not void ab initio, but rather, may be voidable.” Here the Grays failed to make any specific factual allegations showing a violation of N.C.G.S. § 84-4. Further, the Court of Appeals held that foreclosing parties did not have to affirmatively show that the underlying loan were improper, instead such issues could be raised “in an action to enjoin the foreclosure sale under G.S. 45-21.34.” In re Helms, 55 N.C. App. 68, 72, 284 S.E.2d 553, 555 (1981).


The Court of Appeals also referenced that on remand, the trial court in Bradburn ultimately found that the debt was valid despite the indisputable statutory violation. While not having access to that opinion, it is likely that such a result would be different if the validity of the debt was attacked (particularly by the Trustee) in bankruptcy.

For a copy of the opinion, please see:

Gray- Foreclosure does Require Showing that the Underlying Debt was not Illegal.pdf


1. Bachelor of Arts degree in English Literature from Washington University, 1993. 2. Juris Doctor degree from George Washington University, 1996. Admissions to Practice of Law: North Carolina Bar, 1996. Federal District Courts for the Eastern and Middle Districts of North Carolina. Specialty Certification: North Carolina State Bar: Certified as a Specialist in Consumer Bankruptcy. Areas of Practice: Practice limited to consumer and business debtor bankruptcy law, 1998 to present. Memberships: National Association of Consumer Bankruptcy Attorneys (NACBA). North Carolina Academy of Trial Lawyers (NCATL). North Carolina Bar Association, Bankruptcy Section. Lectures prepared and presented: North Carolina Academy of Trial Lawyers seminar on bankruptcy; Topic: Counseling the Consumer Debtor Prior to Court - C.Y.A. Forms to Help 'Gird They Loins'; 2001. Middle District Bankruptcy Seminar; Topic: Preparing Chapter 13 Plans; 2002. NACBA National Convention; Topic: Efficient Office Practices; 2003. NACBA National Convention; Topic: Chapter 7 vs. Chapter 13 Debates; 2004. Middle District Bankruptcy Seminar; Topic: Chapter 7 & 13 Hot Issues; 2004. Positions held: NACBA National Convention; Convention Chair; 2008. NACBA National Convention; Panel Moderator: Topic: Basic Bankruptcy Issues; 2008. NACBA National Convention; Panel Moderator; Topic: Chapter 13-Disposable Income and Other Issues; 2007. NACBA National Convention; Panel Moderator; Topic: Representing Members of the Military and Their Families; 2007. NACBA, Member of National Board of Directors, 2006 to present. NCATL, Chair of the Bankruptcy Section, 2003 to 2007. NACBA, Chair of the North Carolina Section, 2003 to 2007. NC Bar Association, Bankruptcy Section, Bankruptcy Council Member, 2004 to present.

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