Coleman Legal Group, LLC
Phone: 470-947-2471
Wrongful Foreclosure
In Georgia, wrongful foreclosure is a foreclosure that was conducted unlawfully. Wrongful foreclosure is only available, after the foreclosure sale has occurred. See Humphrey v. JP Morgan Chase Bank, N.A., 337 Ga. App. 331; Racette v. Bank of Am., N.A., 318 Ga. App. 171; Dixon v. Branch Banking & Trust Co., 349 Ga. App. 768.
Generally, an action for wrongful foreclosure, in Georgia, would require a claimant to establish that a foreclosing party (such as a bank, credit union, or other lender/creditor) owed a duty to the claimant, the foreclosing party breached that duty, the claimant incurred damages, and those damages were suffered as the result of a causal connection between the breach and the harm suffered (i.e. the foreclosure that resulted).
Foreclosing parties have a legal duty to exercise their power of sale, fairly and in good-faith. Meaning, they are required to comply with statutory requirements and failure to do so may constitute a breach of their legal duties, on several grounds:
Foreclosure Without Proper Notice to the Owner by the Lender
An action for foreclosure without proper notice to the owner, may be available to you if a lender has commenced a foreclosure sale without first providing you with proper notice (the owner of the property) at least 30 days before the date of the foreclosure sale. Proper notice must include the owner/debtor’s name, address, and telephone number. Such notice will be sent via registered or certified mail, statutory overnight delivery, return receipt requested, to the property address or another address designated by the owner/debtor, and published weekly, for four consecutive weeks in the local newspaper. Under Georgia law, owners are entitled to a right to cure or fix their defaulted loan prior to the sale of their property within that 30 days. Foreclosure without proper notice to the owner is considered a procedural defense to foreclosure and one of the most common forms of wrongful foreclosure. See O.C.G.A. § 44-14-162.2; Racette v. Bank of Am., N.A., 318 Ga. App. 171; Bazemore v. U.S. Bank National Association, 363 Ga. App. 723; Roylston v. Bank of Am., N.A., 290 Ga. App. 556.
Lender’s Failure to Follow the Correct Procedure
In Georgia, a foreclosure is properly commenced by the lender/creditor if the property owner/debtor has been notified of the foreclosure sale in the previously stated manner, an affidavit of service has been filed, and the sale itself is conducted pursuant to Georgia’s requirements. See O.C.G.A. § 44-14-180, O.C.G.A. § 44-14-162, and O.C.G.A. § 44-14-161. If the lender fails to follow these steps properly, the foreclosure may be successfully challenged by the property owner/debtor. For example, failure to conduct the sale at the proper time or place could render the foreclosure wrongful. See Bazemore v. U.S. Bank National Association, 363 Ga. App. 723; Babalola v. HSBC Bank, USA, N.A., 324 Ga. App. 750.
Foreclosure by a Party Without the Right to Do So
Under Georgia law, a lender must have standing to bring foreclosure against the person it is sought against. Meaning, a lender or loan servicer must have ownership of the defaulted loan in order to proceed with foreclosure and such ownership should be properly documented. If a lender or loan servicer cannot prove that it has ownership over the loan, then the foreclosure will be deemed wrongful because only the holder of the security deed, promissory note or mortgage has a right to foreclose on their debtor’s property. See You v. JP Morgan Chase Bank, N.A., 293 Ga. 67; Babalola v. HSBC Bank, USA, N.A., 324 Ga. App. 750.
Lender’s Use of Incorrect or Fraudulent Documents
Foreclosure may be wrongful where a lender has used forged or fraudulent documents. Such instances may include, but are not limited to: the falsification of a borrower’s default; the submission of improper, incorrect, or false affidavits (which may also raise perjurious implications upon the lender); and other untrue claims alleging that the borrower/debtor has not paid when they have. See Stewart v. SunTrust Mortg., Inc., 331 Ga. App. 635; Latson v. Boaz, 278 Ga. 113.
Lender’s Failure to Properly Account for Loan Modifications or Payments
Generally, when a lender and borrower have otherwise agreed to a modified payment plan, usually in the form of an adjustment to the loan amount or deferment, and the lender proceeds with the foreclosure process despite that, foreclosure may be considered wrongful especially if such actions are accompanied by instructions by the lender not to pay or threats of foreclosure despite compliance with modified agreements. However, there are instances where such agreements may be in place and a lender is not at fault for continuing with the foreclosure sale. See Webb v. Bank of Am., N.A., 328 Ga. App. 62; Mbigi v. Wells Fargo Home Mortg., 336 Ga. App. 316.
Predatory Lending Practices Against the Borrower
Although predatory lending is not generally considered grounds for wrongful foreclosure under Georgia Law because they are usually penalized as fraud claims under the Fair Business Practices Act and the Georgia Residential Mortgage Act. However, evidence of predatory lending practices may be a significant factor in a court’s determinations as to whether a wrongful foreclosure took place. For instance, when a lender’s loan terms or practices are so unrealistic or deceptive, to the extent that a borrower can not reasonably repay their loan, a court may take notice of such an occurrence if it results in foreclosure. See O.C.G.A. §16-9-60; Stewart v. SunTrust Mortg., Inc., 331 Ga. App. 635; Renasant Corporation v. Korst, 361 Ga. App. 794
Lender’s Violation of a Borrower’s Bankruptcy Protections
Whether or not a borrower has filed for bankruptcy is particularly relevant in determining whether they were wrongfully foreclosed on. Merely, filing for bankruptcy under Chapter 7 or Chapter 13 affords borrowers various federal protections. For example, if a lender continues the foreclosure process without seeking relief (lift of the bankruptcy stay) from the bankruptcy court, such actions may deem a foreclosure wrongful. If a borrower has filed for bankruptcy after the foreclosure process has begun, foreclosure must stop, unless a court has ordered otherwise. A lender’s failure to halt foreclosure proceedings may find them in violation of federal bankruptcy laws. See 11 U.S.C. § 362; Jinks v. Eastman Enters., 317 Ga. App. 489; Breeze v. Columbus Bank & Trust Co., 214 Ga. App. 534.
Lender’s Failure to Provide a Fair and Reasonable Sale Price
Georgia law relies on the true market value of one’s property to determine whether a lender or creditor sold the property for a fair and reasonable price at foreclosure. This rule further evidences a lender’s obligation to act in good faith under the standard that their actions must be commercially reasonable. When a lender’s actions are otherwise considered, they will likely be found in breach of their good-faith obligation under the power of sale. Such a breach is likely to be found when a property is sold for far below its market value, thereby depriving the original owner/debtor/borrower of equity. This may be evidenced where a lender has sold the property to themselves or another purchaser at an unreasonably low price. However, It is important to note that minor deviations from the property’s true market value are unlikely to be considered a breach of a lender’s duty and may still be confirmed by the court. See O.C.G.A. § 44-14-161; Babalola v. HSBC Bank, USA, N.A., 324 Ga. App. 750
Where a borrower has shown sufficient proof of wrongful foreclosure, there may be various remedies available to them, such as damages and rescission of the sale to name a few. See Bazemore v. U.S. Bank National Association, 363 Ga. App. 723; Najarian Capital, LLC v. Milford, 357 Ga. App. 174; James v. Bank of America, N.A., 332 Ga. App. 365.
Attempted Wrongful Foreclosure
Unlike wrongful foreclosure, which requires the conclusion of a foreclosure sale, attempted wrongful foreclosure requires that a lender attempt to foreclose on a property without sufficient grounds to do so. Attempted wrongful foreclosure, in Georgia, generally requires a claimant to show that the defendant knowingly published information that was untrue and derogatory regarding the borrower/claimant’s financial situation and the claimant must have sustained damages as a result of that publication. See 100 Lakeside Trail Trust v. Bank of Am., N.A., 342 Ga. App. 762, Sparra v. Deutsche Bank National Trust Company, 336 Ga. App. 418.
Therefore, it is not enough that a lender attempted to foreclose on one’s property improperly and such foreclosure does not result. The claimant must prove that a wrongful action more similar to defamation occurred.
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Trusts, Wills, Probate, Estate Planning and Administration – Georgia Areas We Serve
Our Georgia Estate Planning attorneys handle cases in the following cities and communities: Atlanta, Alpharetta, Roswell, Duluth, Johns Creek, Milton, Cumming, Suwanee, Marietta, Woodstock, Sandy Springs, Kennesaw, Gainesville, Midtown Atlanta, Norcross, Lawrenceville, Kennesaw, Duluth, Buckhead, Dunwoody, Vinings, Smyrna, Buford, Inman Park, Old Fourth Ward, Decatur, Grant Park, East Atlanta, and the Virginia Highlands.
Our Georgia Estate Planning attorneys frequently handle cases for clients residing in the following counties: Fulton, Gwinnett, Forsyth, Cobb, DeKalb, Henry, Cherokee, Douglas, Carroll, Coweta, Paulding, Bartow, Hall, Barrow, Walton, Newton, Rockdale, Henry, Spalding, Fayette, and Clayton.
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Updated: 2025-0
