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N.C. S.Ct.: Taylor v. Bank of America- Statute of Limitations for Fraud in Mortgage Modification runs from Foreclosure Date

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By Ed Boltz, 22 March, 2024

Summary:

The plaintiffs, a group of homeowners from various states, alleged that Bank of America had engaged in a fraudulent scheme to deny them mortgage modifications under the Home Affordable Modification Program (HAMP) and subsequently foreclosed on their homes. They argued that Bank of America's actions prevented them from receiving permanent modifications to their mortgage terms, despite making required trial payments and repeatedly submitting necessary documentation as requested by the bank.

The SCONC reversed the decision of the Court of Appeals, holding that the plaintiffs' claims were time-barred by the applicable statutes of limitations. The Court found that the plaintiffs knew or should have known of their injuries and the alleged fraud at least four to seven years before filing their complaint, at the latest by the date each plaintiff lost their home to foreclosure. Consequently, the plaintiffs' claims were beyond the permissible period for bringing such claims.

The Court underscored the importance of statutes of limitations in striking a balance between a party's right to assert a claim and another's right to be free from stale claims. It noted that the discovery rule, which tolls the statute of limitations for fraud claims until the aggrieved party discovers the fraud, did not extend beyond the foreclosure dates because the plaintiffs' experiences with the HAMP application process should have alerted them to the need for further investigation.

The dissenting opinion argued that the majority's application of the discovery rule was too narrow and did not align with the jurisprudence surrounding it. The dissent suggested that the statute of limitations for the fraud claims should be equitably tolled for plaintiffs who lost their homes after Bank of America executed a consent judgment, which publicly affirmed its commitment to proper administration of the HAMP program,  while internally working to deny as many HAMP modifications as possible.

Commentary:

The SCONC has basically said out loud that no one can reasonably rely on  what banks say publicly and that bankster fraud should always be assumed.   

Oh, and that the banks will face no consequences. But we all knew that already.

To read a copy of the transcript, please see:

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