In re: ClaytonÂ, 2017 N.C. App. LEXIS 630

Melvin Clayton executed a reverse mortgage note (home equity conversion note) with Wells Fargo on June 13, 2008; Jackie Clayton (his wife) did not sign the note but both signed the deed of trust securing it.
The note and deed of trust included an acceleration clause allowing the lender to demand payment if “a Borrower dies and the Property is not the principal residence of at least one surviving Borrower.”
Melvin died in December 2013; Jackie continued living on the property. Wells Fargo accelerated the loan and initiated a nonjudicial power-of-sale foreclosure under the deed of trust.
The clerk dismissed the foreclosure, finding Wells Fargo lacked the right to foreclose because Jackie had signed the deed of trust and the property remained her principal residence. Wells Fargo appealed to superior court.
On de novo review the superior court found Melvin was the sole borrower under the loan documents, authorized the foreclosure, and Jackie appealed to the Court of Appeals.

Issue	Plaintiff's Argument (Wells Fargo)	Defendant's Argument (Jackie Clayton)	Held
Whether superior court had competent evidence at de novo hearing to authorize foreclosure	Binder of documents provided to the court and clerk (note, deed, loan agreement) plus parties’ stipulations suffice under relaxed evidentiary rules for power-of-sale hearings	Wells Fargo never formally proffered or admitted the note/deed at the superior court hearing, so order lacks competent evidence	Held: Evidence was sufficient—binder + stipulations met the requirements for the six statutory findings under §45-21.16(d)
Whether Wells Fargo had contractual right to accelerate and foreclose when Jackie signed the deed of trust but did not sign the note	The loan documents (note, loan agreement, deed of trust read together) show Melvin alone was the borrower/obligor; Jackie was statutorily ineligible to be a reverse-mortgage borrower, so she is not a “surviving Borrower” for the acceleration clause	Jackie’s signature on the deed of trust makes her a borrower such that the property remained the principal residence of a surviving borrower, barring acceleration and foreclosure	Held: Melvin was the sole borrower; Jackie was not a “surviving Borrower” under the acceleration clause; lender could accelerate and foreclose

In re Lucks, 794 S.E.2d 501 (N.C. 2016) (evidentiary rules are relaxed in nonjudicial power-of-sale foreclosure proceedings and the same standards apply on de novo review)
In re Michael Weinman Assocs. Gen. P’ship, 333 N.C. 221 (1993) (right to foreclose exists if deed of trust terms permit exercise of power of sale under the case circumstances)
In re Hall, 708 S.E.2d 174 (N.C. Ct. App. 2011) (simultaneously executed note, deed, and loan agreement should be construed together to determine parties’ intent)