Real Property – Mortgages – Breach of Contract Claim – Force Placed Insurance – Pleadings Amendment

Plaintiff, the purchaser of defendant’s mortgage, had a reasonable basis to believe home insurance was required for the mortgaged property because (1) in 2013, the defendant-borrower applied for a residential loan from the lender; (2) the lender’s appraisal took into account not only undeveloped lots 13, 15 and 17, but also developed lots 16 and 18; (3) defendant instructed the lender to create an escrow account to pay taxes and home insurance on the property; (4) the terms of the mortgage loan required insurance on the property; and (5) defendant paid home and flood insurance on the property until 2017. Although the deed of trust’s description of the mortgaged property included only undeveloped lots 13, 15 and 17, the plaintiff-mortgage owner had reason to believe the mortgage loan required home insurance on the property and that defendant was not in compliance with this requirement. Consequently, plaintiff did not violate 12 C.F.R. § 1-24.37(a)(1) when if force-placed insurance on the property.

We affirm the trial court’s dismissal of defendant’s counterclaims and its denial of defendant’s motion to amend his counterclaims.

Defendant was not entitled to amend his counterclaims as of right because, after he removed this case to federal court, he filed an amended counterclaim there before the case was remanded to state court.

The trial court could deny defendant’s motion to amend as futile. Plaintiff was the owner of defendant’s mortgage, so it was not a debt collector as defined by the Fair Debt Collection Practices Act. Furthermore, North Carolina does not recognize a claim for breach of contract accompanied by fraudulent acts.

PennyMack Loan Services, LLC v. Johnson (Lawyers Weekly No. 011-061-23, 18 pp.) (Julee Flood, J.) Appealed from Forsyth County Superior Court (David Hall, J.) Brad Johnson, pro se; Chad Ewing for plaintiff; Mark Merritt and Glenn Merten for third-party defendants. North Carolina Court of Appeals