By Neil C. Robinson, III
In the first quarter of 2011, South Carolina ranked
thirteenth in the country for residential mortgage delinquencies, and fifteenth
for foreclosures. 1 The increase in foreclosures is an epidemic that has been
sweeping the entire country for the past several years. Many more people are
struggling to pay their mortgages and often flirt with foreclosure. 2 In the
third quarter of 2011 alone, foreclosure filings in the nation totaled 610,337.
3 While there are some signs that foreclosure filings decreased in the past
year, foreclosures will continue to be prevalent in our current economy. 4
However, imagine a situation in which a person is able to stop paying a
mortgage and the lender is precluded from taking back the property or requiring
the person to pay any more money? A new South Carolina Supreme Court opinion
might make this hypothetical a reality for some future borrowers if lenders do
not follow South Carolina law when preparing and conducting the borrowers' real
estate closings. 5
On August 8, 2011, the South Carolina Supreme Court issued
an opinion in Matrix Financial Services Corp. v. Frazer [enhanced version available to lexis.com subscribers], holding that a lender
is barred from pursuing any equitable remedies against a borrower if the lender
engaged in the unauthorized practice of law in the closing process. 6 In South
Carolina, foreclosure is an equitable remedy; 7 therefore, this holding means
that foreclosing on a borrower's home will not be an available option to
lenders who fail to act in accordance ...
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