Nochus Michael Berry, proceeding pro se, filed suit against Freedom Mortgage, Nationstar Mortgage (Mr. Cooper), Rushmore Loan Management, Rocket Mortgage, and others, seeking relief from foreclosure of his Wilson County residence.
Berry alleged that he was a successor in interest to the property but that the mortgage servicers refused to recognize his status, preventing him from making payments or curing defaults. He also alleged defects in mortgage assignments, servicing records, notices, and foreclosure procedures, asserting claims under RESPA, North Carolina's Unfair and Deceptive Trade Practices Act, and other state and federal laws.
Facing a foreclosure sale scheduled for September 15, 2026, Berry sought an emergency temporary restraining order and preliminary injunction from the federal district court.
Judge Flanagan denied the request, holding that the Anti-Injunction Act, 28 U.S.C. § 2283, generally prohibits federal courts from enjoining state court proceedings, except where expressly authorized by Congress, necessary to aid federal jurisdiction, or necessary to protect or effectuate federal judgments.
Berry had not established any applicable exception.
The court also rejected reliance on N.C. Gen. Stat. § 45-21.34, which permits injunctions against foreclosure sales on legal or equitable grounds, explaining that this statute grants authority to North Carolina Superior Courts, not federal district courts.
The ruling addressed only the requested emergency injunction, not the ultimate merits of Berry's mortgage servicing or RESPA claims.
Commentary:
This decision illustrates the difficulties homeowners face when attempting to stop a North Carolina foreclosure through federal litigation, even where potentially substantial mortgage servicing violations are alleged.
Particularly troubling are Berry's allegations that the mortgage servicers refused to recognize him as a successor in interest, thereby preventing him from making payments or curing the default.
Under Regulation X, 12 C.F.R. §§ 1024.30(d) and 1024.36(i) provide protections concerning confirmed successors in interest, including treatment as borrowers for specified mortgage servicing protections and procedures for obtaining information necessary to establish successor status.
Whether Berry qualified for those protections, and whether the servicers violated them, remained unresolved.
The procedural distinction is critical: A potentially valid RESPA claim does not, by itself, give a federal district court authority to halt a pending state foreclosure.
For North Carolina practitioners, § 45-21.34 provides a state-court avenue for seeking injunctive relief before foreclosure rights become fixed.
The Bankruptcy Exception
Importantly, the automatic stay under 11 U.S.C. § 362 is expressly authorized by Congress and therefore falls within an exception to the Anti-Injunction Act. Unlike an injunction issued in an ordinary federal civil action, the bankruptcy automatic stay arises by operation of federal law and applies to state foreclosure proceedings without requiring a separate injunction from the bankruptcy court.
Chapter 13 also permits debtors to cure mortgage arrearages over time under § 1322(b)(5).
Berry, however, had previously filed three Chapter 13 cases—23-03064-5-JNC, 25-01835-5-JNC, and 25-03894-5-JNC—all dismissed, apparently before confirmation, with the two most recent filed pro se.
Those filings raise additional complications under § 362(c)(3) and (4), which limit or eliminate the automatic stay for certain repeat bankruptcy filings, depending on the timing of prior dismissals.
Repeated unsuccessful bankruptcy filings are no substitute for a confirmable Chapter 13 plan, particularly where mortgage arrearages and ongoing payments must be addressed.
The practical lesson: Even meritorious allegations of mortgage servicing misconduct will not necessarily stop a foreclosure. Attorneys must consider not only whether a servicer violated the law, but which court has authority to provide timely relief—and whether Chapter 13 offers a sustainable solution rather than merely another temporary interruption of foreclosure.
To read a copy of the transcript, please see:
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