In this post we’ll begin to examine the “heart” of a NC non-judicial foreclosure — the first of the 4 core elements that the clerk must find before entering an order allowing the property to go to auction. First up: “the existence of a valid debt of which the party seeking to foreclose is the holder.” Let’s break this down into 2 parts: 1) valid debt, and 2) holdership.
“Valid debt” refers to the debt evidenced by the promissory note you signed at closing, whether it was a refinance or the loan was used to buy the property. Did you sign the promissory note? Did you receive the money? It’s really as simple as that.
But what if the amount the bank is claiming I owe is way off? What if the amount the lender claims I owe is padded with junk fees? NC case law seems to indicate that a dispute over the amount of the debt does not fall within the jurisdiction of the clerk. Instead, such a dispute is properly raised in a lawsuit, or as a defense if the bank sues you for a shortfall following the foreclosure sale. None of this is to say that an argument over the amount shouldn’t be made. After all, how would the law ever change if people didn’t argue that it should be changed?
Ok, this is the part where you get to shout, “Show me the Original Note!” but only in the rare circumstance where you dispute that the copy of the Note is an authentic copy. In other words, you’re saying that you didn’t sign it, or that it has been altered in some way. This would be an exceedingly rare circumstance which would call for a handwriting expert. I’ve never seen a Note with a forged signature, and I don’t expect to. Still, stranger things have happened.
Next time I’ll write about “holdership.” Failing to prove holdership is the most common way mortgage servicers foul up foreclosures, but it takes a keen eye to spot.