You’re at the foreclosure hearing. At the conference table sits the clerk of superior court and the attorney for the substitute trustee. A common misperception is that the attorney sitting across from you represents the lender. Actually, the attorney represents the substitute trustee — a neutral third-party owing a duty to both the borrower and the lender under the terms of the deed of trust.
The attorney for the substitute trustee cannot help you or answer questions about your dilemma. Neither can he or she advocate for the lender. So if the attorney for the substitute trustee starts to argue for the bank, he or she is acting outside the scope of their authority under the deed of trust, and also going outside ethical boundaries set by the NC State Bar.
So what exactly takes place at the hearing? If you are actively working with the bank to obtain a modification or other workout — such as a short sale or deed-in-lieu of foreclosure — and the property is your primary residence, you might be entitled to a one time, 60 day continuance under NC law. (If this is your second or third hearing, the statutory continuance is not available, and you will need to show the clerk “good cause” to continue the hearing again. Such continuances are rare. In other words, you need an attorney…)
Let’s say you’ve run out of continuances. What does it take for the bank to foreclose on your house? The clerk must find the following: the existence of (i) a valid debt of which the party seeking to foreclose is the holder, (ii) default, (iii) right to foreclose under the instrument, (iv) notice to those entitled to such under subsection (b), (v) that the underlying mortgage debt is not a home loan as defined in G.S. 45-101(1b), or if the loan is a home loan under G.S. 45-101(1b), that the pre-foreclosure notice under G.S. 45-102 was provided in all material respects, and that the periods of time established by Article 11 of this Chapter have elapsed, and (vi) that the sale is not barred by G.S. 45-21.12A. N.C. Gen. Stat. 45-21.16(d).
At this point, I hope you’re getting the feeling that you might need an attorney. Saving your home from foreclosure is not a “do-it-yourself” project. The stakes are too high, and if any of these elements are lacking, but you fail to notice and argue it successfully to the clerk, you might not get a second chance (I will cover the appeal process in a subsequent post).
And please, don’t go to the hearing and proclaim “Show Me the Note!” under the mistaken belief that it’s going to get you a free house. That’s one of the MANY urban myths — or “Internet arguments,” as I call them — that will get you nowhere, and perhaps ruin your opportunity to mount a real defense.
In the next post I will cover the first of the six elements above — “the existence of a valid debt of which the party seeking to foreclose is the holder.” I promise that it’s more interesting than it sounds…