In the case of Frangos v. Bank of America, et al, the United States Court
of Appeal for the First Circuit Court ruled that, the borrower is not
entitled to a permanent injunction preventing a foreclosure, following
cancellation of the foreclosure by the lender since there would be no
irreparable harm to the borrower. Borrower refinanced the mortgage that
was secured by their home in 2005. However, in both 2007 and 2009, the
borrower defaulted on the mortgage. After the first default, the loan
was restructured, but the borrower still could not perform and have filed
to make a payment since 2009. Borrower and lender engaged in extensive
negotiation to modify the loan between 2011 and 2013, but the negotiations
were ultimately unsuccessful and a lender moved forward with foreclosing,
with the foreclosure sale set to occur in September of 2013. In response,
the borrower sought and obtained a preliminary injunction from the New
Hampshire state court, preventing the foreclosure sale from proceeding.
Despite the fact that lender cancelled the foreclosure sale, borrower
did not dismiss the underlying action. After the removal of the action
to the federal court, the borrower amended the complaint seeking a permanent
injunction to bar the lender from foreclosing. The borrower also sought
damages, alleging that the lender had
breached mortgage provisions that require the borrower to be provided with
notice explaining the nature of the default and the potential consequences.
The district court ruled for the lender, granting summary judgment and
finding that because the lender cancelled the foreclosure sale, the borrower
could not demonstrate that they would suffer irreparable harm without
injunctive relief. The district court further granted summary judgment
in favor of the lender with respect to borrower’s claim of breach
of contract because borrower had suffered no damages since the sale was
cancelled by the lender. Unsatisfied, the borrower appealed the decision.
However, the First Circuit upheld the district court’s ruling, stating
that without foreclosure proceedings, the borrower would not suffer any
irreparable harm and further that the borrower did not suffer any damages
to support the breach of contract action.
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