16–7. CASE PROBLEM WITH SAMPLE ANSWER: Wrongful Foreclosure.

After a series of bankruptcies and foreclosures, Wells Fargo Home Mortgage, the mortgagee, foreclosed on the debtors’ home and purchased it for

$33,500. The debtors then fi led a complaint against Wells Fargo and certain related entities, claiming wrongful foreclosure and breach of contract. The debtors sought damages, specifi c performance, and other remedies.

The dispute grew out of a loan note for $51,300 that the plaintiffs had executed with Southern Atlantic Financial Services, Inc. In exchange for that loan, the plaintiffs gave Southern Atlantic a security interest in their home. Southern Atlantic transferred its interest in the property and the note to GE Capital Mortgage Services, Inc. On September 30, 2000, Wells Fargo Home Mortgage started servicing this loan for GE. Wells Fargo acquired the loan from GE on December 1, 2004. When the plaintiffs did not make all of the required payments, Wells Fargo sought relief from a stay to fi le a foreclosure because the debtors were in arrears on the mortgage.

The parties agreed that Wells Fargo could have relief from the stay if the debtors failed to make all future payments.

Claiming default, Wells Fargo then fi led a foreclosure and bought the property at the sale. The debtors fi led a complaint alleging that the price paid was shockingly insuffi cient and constituted wrongful foreclosure and a breach of fi duciary duty. Under what circumstances is a foreclosure sale unfair?

Does a property foreclosure sale have to realize the market price? The amount owed on the note? Discuss. [ In re Sharpe, 425 Bankr. 620 (N.D.Ala. 2010)]

• To view a sample answer for Problem 16–7, go to this book’s Web site at www.cengage.com/blaw/cross, select “Chapter 16,” and click on “Case Problem with Sample Answer.”