If a Clerk of Court authorizes a foreclosure sale and the
trustee sells the property, can a borrower or other aggrieved party
later sue to nullify the foreclosure sale or recover damages caused
by the foreclosure?
In the recent case of Gray v. Fannie Mae, the
North Carolina Court of Appeals said "no." The
court held that the doctrine of collateral estoppel barred such
lawsuits. This is welcome news for lenders because the
decision provides finality to foreclosures and limits the specter
of post-foreclosure lawsuits.
The Facts
In 2006, Mary and Jack Gray borrowed $300,240 from Wells Fargo
as part of a reverse mortgage transaction. The collateral in
the Deed of Trust described a tract that encompassed the Grays'
primary residence and the home of a relative – Grace
Peele. After Wells Fargo recorded the Deed of Trust, the
Grays subdivided the land to separate their parcel from the Peele
parcel. The Peele parcel was not released from the Deed of
Trust. Mary
