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Remedy for Wrongful Foreclosure

SE Property Holdings, LLC v. Bama Bayou, LLC, et al.; FNB Bank v. Marine Park, LLC, et al., [Ms. 1190205; 1190251, Dec. 31, 2020], ___ So. 3d ___ (Ala. 2020). The Court (Bolin, J.; Shaw, Bryan, Sellers, Mendheim, and Mitchell, JJ., concur; Parker, C.J., dissents; Stewart, J., recuses) reverses the Mobile Circuit Court’s judgment refusing to award lenders certain collection costs, interest, and late charges under defaulted mortgages. Ms. *35.

While the lenders did not appeal from an order setting aside a foreclosure sale, they challenged the trial court’s equitable authority to limit their damages for breach of contract as a remedy for the wrongful foreclosure. Ms. **37-38. The Court agrees and explains

Vision Bank and Bama Bayou and Marine Park decided in the mortgages that the sole remedy for a wrongful foreclosure was to set aside the foreclosure and to return the parties to their former positions and rights under the mortgages and that all rights, powers, and remedies of Vision Bank would continue as if no foreclosure proceeding had taken place, including the right to recover accrued interest, late charges, attorney’s fees, collection costs, and property-preservation expenses. Those provisions are clear and unambiguous. Thus, the mortgages must be enforced as written.

Ms. *42.

The Court also holds more broadly that “[i]n Alabama, the appropriate remedy for a wrongful foreclosure, based upon a finding of an inadequate purchase price at the foreclosure is to have the foreclosure set aside. Breen v. Baldwin Cnty. Fed. Sav. Bank, 567 So. 2d 1329, 1333 (Ala. 1990) (citing Hayden v. Smith, 216 Ala. 428, 113 So. 293 (1927)).” Ms. **43-44.

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