N.C. Court of Appeals: Haughton v. HSBC Banks USA, N.A.- Bases for Foreclosure Must be Challenged at Foreclosure or on Appeal

Summary: The Mecklenburg Clerk of Court authorized a foreclosure sale on September 29, 2010. There was no appeal of that order. Nearly a year later on August 8, 2011, the homeowner brought suit alleging that the foreclosure order had been premised on fraudulent documents, that the parties initiating the foreclosure had lacked any interest in the debt and lack of notice. The trial court dismissed the complaint pursuant to Rule 12(b)(6) finding that the homeowner could not re-litigate issues which had been judicially determined in the foreclosure. The Court of Appeals held that these matters, which go to requirements under N.C.G.S. § 45-21.16(d), should have been raised either at the foreclosure hearing on appeal. See In re Foreclosure of Goforth Properties, Inc., 334 N.C. 369, 374-75, 432 S.E.2d 855, 859 (1993). Commentary: This contrasts with the prohibition of raising other defenses or claims as part of the foreclosure itself, instead requiring a separate action. For a copy of the opinion, please see: Haughton v. HSBC Banks USA, N.A.- Bases for Foreclosure Must be Challenged at Foreclosure or on Appeal.pdf