Recent case of interest confirming that the statute of frauds can bar a Homeowner’s suit to try to set aside a foreclosure sale.
A homeowner brought a lawsuit to set aside a foreclosure sale alleging that the Lender made oral representations to provide the homeowner with a loan modification if they met certain criteria and telling the homeowner to disregard the notice of foreclosure due to the pending loan modification request. See McFadden v. Federal Nat’l Mortg. Ass’n, No. 12-1125, 2013 U.S. App. LEXIS 10067 (4th Cir. May 20, 2013). The homeowner asserted that Plaintiff relied on oral promises by the lender that it would modify the terms of the loan and that the foreclosure sale of the property would not take place.
The court held that such alleged oral representations of alleged promises cannot serve as a basis to set aside a foreclosure sale of real property as oral promises and oral contracts affecting real property are unenforceable pursuant to the statute of frauds. Next, the homeowner also challenged the validity of the deed of trust and appointment of substitute trustee resulting in the foreclosure of the homeowner’s property. However, the court found that the deed of trust and document appointing the substitute trustee to be valid instruments and affirmed the trial court’s dismissal of the homeowner’s quiet title claim under Rule 12(b)(6).
No information in this article is intended to constitute legal advice. For specific legal advice, please contact an attorney.