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In re Foreclosure of Real Property Under a Deed of Trust Executed by Collins

Court of Appeals of North Carolina

February 7, 2017

IN THE MATTER OF THE FORECLOSURE OF REAL PROPERTY UNDER A DEED OF TRUST EXECUTED BY ROBERT C. COLLINS AND RHONDA B. COLLINS DATED JUNE 20, 2006 AND RECORDED ON JUNE 23, 2006 IN BOOK K-30 AT PAGE 975 IN THE MACON COUNTY PUBLIC REGISTRY, NORTH CAROLINA.

          Heard in the Court of Appeals 29 November 2016

         Appeal by respondents from order entered 20 January 2016 by Judge Marvin Pope in Macon County Superior Court No. 13 SP 130.

          Katten Munchin Rosenman LLP, by Rebecca K. Lindahl and Daniel S. Trimmer, for petitioner-appellee.

          Jones, Key, Melvin & Patton, P.A., by Fred H. Jones, for respondents-appellants.

          ZACHARY, Judge.

         Respondents appeal from an order authorizing Beneficial Financial I Inc., through substitute trustee Trustee Services of Carolina, LLC (Trustee Services), to proceed with foreclosure in accordance with the terms of the Deed of Trust secured by real property located at 212 Cedar Ridge Road, Franklin, North Carolina (the property). For the reasons that follow, we affirm.

         I. Background

         On 20 June 2006, Respondents borrowed $102, 726.34 by executing a loan agreement (the Note) in favor of Beneficial Mortgage Company of North Carolina (BMCNC). The Note was secured by a Deed of Trust that encumbered the property. In 2009, BMCNC merged with Beneficial Mortgage Company of Virginia (BMCV), which then merged with Beneficial Financial I Inc. (Beneficial).

         Respondents later defaulted under the terms of the Note. As a result, Beneficial, through Trustee Services, initiated foreclosure proceedings pursuant to the power-of-sale provision contained in the Deed of Trust. The Notice of Hearing, dated 10 June 2013, indicated that "the current holder of the above-described Deed of Trust and the indebtedness secured thereby is: Beneficial I Inc Successor by Merger to Beneficial Mortgage Co of North Carolina."

         On 17 October 2013, the Clerk of Superior Court of Macon County conducted a hearing on the matter pursuant to N.C. Gen. Stat. § 45-21.16 and found, inter alia, that notice was given to the record owners of the property, that Beneficial was the holder of the Note, that the Note was in default, and that Beneficial had the right to foreclose under the power-of-sale provision in the Deed of Trust. That same day, the clerk entered an order allowing Trustee Services to proceed with the foreclosure sale. Respondents appealed the clerk's order to Macon County Superior Court for de novo review.

         On 19 January 2016, Judge Marvin Pope conducted the de novo hearing in the power-of-sale foreclosure proceeding. At the hearing, Beneficial introduced into evidence an Affidavit of Default that had been executed by Beneficial's Assistant Secretary of Administrative Services, Cherron Martin. In Paragraph 3 of the affidavit, Martin averred that, based on her own personal knowledge of the business and loan records at issue, "BENEFICIAL is in possession of the original promissory note and/or loan agreement ("Note") for this Loan. . . ." A number of exhibits were attached to Martin's affidavit, including photocopies of the Note, the Deed of Trust, and merger documents pertaining to both BMCNC's merger with BMCV and BMCV's merger with Beneficial.

         Respondents objected to the admission of Martin's affidavit on three grounds: (1) the affidavit was signed in July 2013 and there was no indication as to whether the Note had been negotiated since then; (2) none of the averments established that Martin had personal knowledge of Beneficial's possession of the Note; and (3) the affidavit was not accompanied by the original Note. After noting that Paragraph 3 of the affidavit says "Beneficial is in possession of the original promissory note and/or loan agreement for this loan[, ]" Judge Pope overruled respondents' objection.

         Respondents also moved for a directed verdict "on the basis that [Beneficial] has failed to prove they're the holder of the note and can't proceed." Judge Pope denied the motion. As a result, Martin's affidavit was admitted into evidence, together with the accompanying exhibits.

         On 20 January 2016, Judge Pope entered an order that authorized Trustee Services to proceed with the foreclosure on the property in accordance with the ...


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