Professional Negligence Law Reporter

The North Carolina Supreme Court held that a trial court had properly dismissed the claims of mortgagors who sued their mortgage loan servicer for fraud and other allegations arising out of the servicer’s alleged failure to comply with the Home Affordable Modification Program (HAMP), a federal mortgage relief program to assist American homeowners facing foreclosure after the 2008 recession.

Here, homeowners from North Carolina and other states who elected to participate in HAMP sued Bank of America, N.A., alleging the defendant engaged in a fraudulent scheme to prevent eligible applicants from receiving mortgage modifications and that this resulted in foreclosures. The complaint, which was filed in May 2018, alleged that each plaintiff lost their home to foreclosure between April 2011 and January 2014. The trial court granted the defendant’s motion to dismiss on the grounds that all the plaintiffs’ claims were barred by the applicable three- or four-year limitations statute. An appellate court reversed.

Reversing the lower appellate court, the state high court noted that a three-year limitations period applies to all the plaintiffs’ claims, except for their unfair and deceptive trade practices claim, which falls under the four-year limitations period. Citing case law, the court found that the limitations statute for fraud claims is tolled until discovery of the facts constituting the fraud or from the time they should have been discovered by the exercise of proper diligence or reasonable prudence. As soon as the injury is apparent to the plaintiff, or reasonably becomes apparent, the court added, the cause of action is complete and the limitations period begins to run.

Applying these principles here, the court concluded that the plaintiffs’ injuries were complete when they lost their homes and they knew, or reasonably should have known, that the defendant’s delays and denials of their multiple HAMP reapplications were wrongful. Moreover, the court said that the plaintiffs could easily have discovered nationwide litigation regarding the defendant’s alleged similar mistreatment of other homeowners around the country.

Finding that the plaintiffs had notice of their injuries at least four to seven years before filing their lawsuit, the court determined that they had lost the right to pursue a remedy by failing to exercise ordinary diligence within the applicable limitations period. Consequently, the trial court had not erred in dismissing the plaintiffs’ complaint.

Citation: Taylor v. Bank of Am., N.A., 898 S.E.2d 740 (N.C. 2024).