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In re Foreclosure of A Deed of Trust Executed by Worsham

Court of Appeals of North Carolina

September 17, 2019

IN THE MATTER OF THE FORECLOSURE OF A DEED OF TRUST EXECUTED BY REBECCA WORSHAM AND GREG B. WORSHAM DATED JANUARY 8, 2007 AND RECORDED IN BOOK 21638 AT PAGE 600 IN THE MECKLENBURG COUNTY PUBLIC REGISTRY, NORTH CAROLINA.

          Heard in the Court of Appeals 7 August 2019.

          Appeal by Respondents from order entered 13 August 2018 by Judge Hugh B. Lewis in Mecklenburg County, No. 16-SP-2777 Superior Court.

          Bradley Arant Boult Cummings LLP, by Brian M. Rowlson, for Petitioner-Appellee.

          Scarbrough & Scarbrough, PLLC, by Madeline J. Trilling, for Respondents-Appellants.

          BROOK, JUDGE

         Rebecca and Greg Worsham ("Respondents") appeal the trial court's order allowing foreclosure of their home to proceed. In a prior appeal, we reversed the order of the trial court allowing foreclosure of Respondents' home to proceed, remanding the matter for further proceedings. See In re Worsham, __ N.C.App. __, 815 S.E.2d 746, 2018 WL 3233086 (2018) (unpublished) ("Worsham I"). The present appeal originates from those proceedings. For the reasons that follow, we affirm the order of the trial court.

         I. Background

         The facts of this dispute are set out more fully in our opinion in Worsham I and we recount only those necessary to resolve the instant appeal. On 12 April 2005 Respondents purchased a home located at 3501 Providence Road, in Charlotte, North Carolina, financing the purchase with a loan secured by a deed of trust. On 8 January 2007, Respondents refinanced the home, securing the refinancing with a deed of trust. The deed of trust from the 2007 refinancing was recorded with the Mecklenburg County Register of Deeds. Respondents have not made any payments on the note from the 2007 refinancing since 2012.

         The note provides in relevant part that if the borrower is "in default, the Note Holder may send [] a written notice telling [the borrower] that if [the borrower] do[es] not pay the overdue amount by a certain date, the Note Holder may require [the borrower] to pay immediately the full of amount of Principal which has not been paid and all the interest that [the borrower] owe[s] on that amount." On 21 March 2016 Respondents were notified that they were in default and that foreclosure proceedings would be initiated if the default was not cured.

         On 19 July 2016 the substitute trustee initiated foreclosure proceedings with the clerk of Mecklenburg County Superior Court. The matter was dismissed by the clerk on 6 December 2016 because the clerk did not believe there was sufficient evidence of the substitute trustee's authority to foreclose under the deed of trust. On 8 December 2016, HSBC Bank USA, N.A. ("Petitioner") appealed the clerk's order for a de novo hearing in superior court.

         Judge Hugh B. Lewis presided over a hearing on 13 March 2017, during which the original note, a certified copy of the deed of trust, and a certified copy of the assignment of the deed of trust were submitted to the court. On 12 April 2017, the court entered an order allowing foreclosure to proceed. Respondents timely appealed.

         In an unpublished opinion, this Court on 3 July 2018 reversed the trial court's order and remanded the matter for further proceedings. See Worsham I, at *1. In our opinion we explained that reversal was required because the trial court had not found in the 12 April 2017 order that Petitioner was the holder of the debt evidenced by the note, as N.C. Gen. Stat. § 45-21.16(d) requires. Id. at *3. We therefore remanded the matter for further proceedings because the trial court had "summarily concluded that Petitioner had the right to foreclose on the property without first having made a finding whether Petitioner was the holder of the debt at issue." Id. (emphasis added). We noted in conclusion that "[o]n remand, the trial court may . . . make additional findings based on the existing record." Id. at *4 (emphasis added).

         After the mandate of our 3 July 2018 opinion had issued, on 13 August 2018, without further hearing on remand, the trial court entered an order allowing the foreclosure to proceed, finding as follows:

1. That Respondent Rebecca Worsham originally executed a promissory note in the amount of $249, 000 in favor of lender Delta Funding Corporation.
2. That the promissory note was secured by a Deed of Trust executed by both Respondents, with such Deed of Trust being an encumbrance on the real property located at 3501 Providence Road, Charlotte, North Carolina 28211 ("Property"). The Deed of Trust contains a valid and enforceable power of sale provision.
3. That Petitioner is currently in possession of the original promissory note and presented the original promissory note to the court at the hearing without objection by the Respondents.
4. That the original promissory note provided by Petitioner contains a chain of valid and complete indorsements from Delta Funding Corporation to Petitioner HSBC Bank USA, N.A., as Indenture Trustee for the Registered Noteholders of Renaissance Home Equity Loan Trust 2007-1.
5. That Petitioner produced certified copies of the recorded 1) Deed of Trust securing the Property, 2) the assignment of the deed of trust to Petitioner, and 3) appointment of substitute trustees.
6. That the evidence provided by Petitioner, including the affidavit, loan payment history and correspondence, and by Respondents' own admission at the hearing, show that the Respondents have repeatedly failed to make each of the monthly payments as required by the promissory note for several years. Respondents did not provide evidence at the hearing refuting this evidence of this continuing and ongoing default.
7. That Petitioner sent Respondent Rebecca Worsham a pre-foreclosure notice dated March 21, 2016, advising of Petitioner's intent to foreclose if the ongoing and continuing default was not corrected within 45 days. Respondent failed to correct the default.
8. That the Respondents are not in the military and received the required notice of hearing.

         The trial court therefore made the following conclusions of law:

1. Service. Each person/entity entitled to notice was duly served with proper notice as provided by law.
2. Holdership of Note and Validity of Debt: That Petitioner HSBC Bank USA, N.A., as Indenture Trustee for the Registered Noteholders of Renaissance Home Equity Loan Trust 2007-1 is the holder of said promissory note and Deed of Trust to be foreclosed, and that the promissory note evidences a valid debt owed by Respondents.
3. Default: That Respondents are now in default of the promissory note, and the Deed of Trust gives Petitioner the right to foreclose under a power of sale and is enforceable according to its terms.
4. Home Loan Status: That the underlying promissory note is a home loan as provided by N.C. Gen. Stat. § 45-101(1b), the requisite pre-foreclosure notice was provided in all material respects, and that all relevant periods of time have elapsed prior to the filing of a notice of hearing in this foreclosure proceeding.
5. Military Status: That the foreclosure sale is not barred by N.C. G.S. § 45-21-12A because the provisions of N.C. G.S. § 45-21-12A are inapplicable to this current proceeding and Respondents do not challenge this statutory element.
6. That no valid defense or evidence was presented to the Court by the Respondents as to why the foreclosure should not proceed.
7. Per the July 3, 2018 decision of the North Carolina Court of Appeals, this Order is intended to replace and supersede the Order Authorizing the Foreclosure of the Property Through the Power of Sale Authorized by the Deed ...

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