Summary:
John and Jamie Davis purchase a home in 2007 with financing from HSBC Mortgage. Subsequently, in 2008 Jamie Davis and her mother-in-law, Rhea Davis, executed a new promissory note, with Jamie Davis signing for her husband, John, using a power of attorney. The Davis’ began missing mortgage payments and pre-foreclosure notice was sent on March 29, 2011, pursuant ton N.C.G.S. § 45-102. The foreclosure was then voluntarily dismissed without prejudice on August 6, 2015. A new foreclosure was then recommenced on September 24, 2015.
On appeal, the Davises argued first that the March 29, 2011, foreclosure notice was not compliant with the requirement that a pre-foreclosure notice be sent 45 days prior to commencement of a foreclosure action. The Court of Appeal held that where there had been no cure of the default or even an attempt at a cure, the original notice was sufficient when the prior foreclosure had been dismissed without prejudice.
The Davises also argued that Jamie Davis had, at the instigation of the real estate closing attorney (whom denied the allegation), forged her husband’s signature on the Power of Attorney authorizing her to sign the Deed of Trust on his behalf. The Court of Appeals also rejected this, finding that the Davises together had received the benefit of the mortgage, both in paying off the previous note and in an equity “cash out”, and had acted in a manner consistent with recognizing the Deed of Trust.
Commentary:
That the nearly 5-year old pre-foreclosure notice was sufficient, despite not only its age, but also that the details were no longer accurate, seems an absurdly strict reading of a consumer protection statute. Under only a small extension of the same logic (or lack thereof), there would seem to be no reason that a mortgage servicer should not send every borrower a notice of intent to foreclosure immediately after consummating the loan, as that would be more than 45 days prior to any subsequent foreclosure.
When asserting forgery, John Davis would have had a stronger case if he had both shown that he did not receive the funds from the refinance and had brought criminal charges against his wife for forging his name. That would have likely caused different problems in the home.
For a copy of the opinion, please see:
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