Murphy v. Financial Development Corp.

Facts

The plaintiffs entered a mortgage loan to finance their house purchase in 1966. In 1981, the plaintiffs were seven months behind on their mortgage payments, amongst other payments. The defendant/lenders attempted to work with the plaintiffs, giving them the opportunity to avoid foreclosure. Eventually, the plaintiffs paid the seven months’ mortgage arrearage, but failed to pay some costs and legal fees associated with the foreclosure proceedings. At the plaintiff’s requests, the lenders agreed to postpone the foreclosure sale until December to give the plaintiffs the opportunity to pay the costs and legal fees, and the mortgage payment due in the month of October. The plaintiffs paid the mortgage payment due in October but made no further payments to the lenders. The lenders proceeded with the foreclosure sale. The lenders’ representative made the only bid at the sale, at $27,000. The $27,000 accounted for the amount owed on the mortgage, plus costs and fees, and was accepted and the sale concluded. Later that same day, Southern New Hampshire Home Traders, Inc. was informed of the sale, and they contacted the lenders to make a purchase offer. The lenders rejected Southern’s initial offer and negotiated a purchase price of $38,000. This sale was also completed. The plaintiffs filed suit for unfair practices at the foreclosure sale, alleging that the defendant-lenders could have obtained a better price at the initial sale to its own representative.