Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
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Sandy
I'm trying to get more information on a supreme court case in New York that is related to a dismissed foreclosure because the wife didn't sign the note. I'm not sure how to find it. If anyone can help, I would greatly appreciate your time in letting me know.
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Angelo
Was there a decision handed down on the case?  If so go here...http://iapps.courts.state.ny.us/lawReporting/Search, and type in the partys name/judge/index number.

If the case is still pending, then your going to need to go the county court house and pull the records.
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Sandy
Thank you so much, Angelo!

I know little about the case, I am trying to find it because of testimony the judge gave at a congressional hearing. A few comments she made applies to me and two other homeowners with whom I am acquainted. In each of our cases, the wife did not sign the note.

In my case, I just learned that the homestead is strictly protected by the Constitution. The law states:

No deed, mortgage, or contract affecting the homestead exempt by law, except a lease for a period not exceeding one (1) year, shall be valid unless in writing and subscribed by both husband and wife, if both are living and not divorced, or legally separated...



It seems to me that the note would be a contract and if I didn't sign it, then it's not valid. I didn't sign the sales contract or the loan application either. If you or anyone wants to venture an opinion about the above, I would like to hear it.


 
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I'm in the same situation in NH.  I signed the promissory note alone, but the missus signed the mortgage.  It's a meaningless situation here because my mortgage specifically talks about cosigners who didn't sign the note and what the signature on the mortgage means in those circumstances.

The mortgages/DOT that you're thinking about might also have the same language?

A much more powerful circumstance would be where one spouse signs mortgage and note, but other spouse is on the deed.

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William A. Roper, Jr.
Sandy:

There are a wide variety of circumstances where a person might sign a mortgage or deed of trust, but NOT sign the promissory note as an obligor.  There is NOTHING singular or unusual about this, nor is this something that is necessarily sinister.

The classic case arises when a person originally takes title and signs as a co-maker, but doesn't really claim or desire an interest in the subject property.  For example, Miss Jane SMITH purchases a house and her father Mr. John SMITH adds credit support by lending his name to the application, note and mortgage.  But Miss SMITH really comes up with all of the downpayment of her own funds and makes all of the monthly payments.  Legally, Mr. SMITH is a co-owner, but the intention of the parties is that he is merely a surety.

When Miss Jane SMITH's finances improve, she applies for a refinance in her own name, using solely her own income and credit.  Mr. SMITH is NOT called upon to sign the promissory note, but in order for the mortgage company to have a valid mortgage interest in the subject property, Mr. SMITH DOES need to sign the mortgage.

It should be noted that it would be generally cleaner in this situation for Mr. SMITH to simply deed his interest in the property to Miss SMITH concurrent with the refinancing.

Another similar situation might arise where one of two or more joint owners dies and conveys his or her interest to heirs of the next generation.  For example, Mr. and Mrs. John SMITH jointly own a property and Mr. SMITH dies, leaving Mrs. Mary SMITH a widow.  While intuition might suggest that Mr. SMITH's interest devolve upon Mrs. SMITH, there might be some strong and valid estate planning reasons to pass this interest directly to the next generation.  If the interest goes to Mrs. Mary SMITH rather than directly to daughter Miss Jane SMITH, then it will pass through two estates rather than one, possibly increasing estate and inheritance taxes, probate costs, etc.

Now after her father's death, Miss SMITH is the co-owner of the property with her mother.  Mother desires to refinance.  Mrs. Mary SMITH has sufficient income and credit to qualify.  The transaction need not rely on Miss Jane SMITH's income or credit.  Mrs. SMITH would therefore sign the mortgage, but NOT the note.

From Miss SMITH's perspective, the property was already encumbered by a mortgage that her mother paid.  The refinance transaction, lowering the interest rate, but not advancing any additional capital makes the loan more affordable to her mother without impairing her interest in the subject property.  (Of course, she might also execute a mortgage when it is not in her economic interest to do so out of love and affection for her mother.)

*

Sandy:

I believe that you are generally going to find the Constitutional language you cite to be unavailing. 

There are a couple of considerations.  First, though promissory notes are often described as contracts, they really are NOT.  They are better described under the law as unilateral undertakings.

Take notice that the promissory note is executed ONLY by the borrower, NOT by the lender.

Moreover, the promissory note secures the repayment of the loan.  The mortgage further secures the repayment by the pledge of the subject property as additional security.

The promissory note is actually INDEPENDENT of the subject property and it is ONLY the mortgage, deed of trust or other mortgage security instrument which secures the property to the loan.

So from the perspective of the described Constitutional restraint, it would seem to me that it imposes NO REQUIREMENT that a person other than the obligor on the negotiable instrument sign.  The note is signed by that obligor and a person willing to give a security instrument in the property then signs the mortgage, deed of trust or other mortgage security instrument.

*

There is a separate kind of contract called an installment sale contract.  Unimproved land has often been sold this way.  In an installment sales contract, the title to the property isn't usually transferred until such time as the contract is fully paid off. 

Similarly, when properties are sold there is usually a sales contract prior to conveyance.  The sales contract commits the parties to the sales transaction.  I am confident that it is these sorts of contracts contemplated by the provision you cite.

*

In the end, though, the Constitution means what the courts say it means.  So check out cases which explain and elaborate on these provisions.

Finding such cases is of little interest to me, because I believe that this is an unproductive avenue of research.
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Sandy
Thanks, Mr. Roper.

So the sales contract would be related to, for instance, a husband selling the property without the consent of the wife. It would not include a contract to buy the homestead, which the wife did not sign, right?

If I'm understanding this correctly, then the point of the protection of the homestead is against creditors other than the purchase money lender, and the other part just protects all parties from one in the couple, or group, from selling without permission of the other parties with interest in the property. Is that correct?

You keep me from going off on wild goose chases, and I appreciate that! Thank you.

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William A. Roper, Jr.
Sandy:

I have NOT researched any cases on the state Constitutional provision you cite, but my lay reading would be that a wife (or husband) should feel secure that they wouldn't return from work and discover that their spouse had encumbered the homestead without their permission and assent.

Of course, you get the exception language as to divorce or legal separation.  So if either were to first obtain a divorce or legal separation, then this seems to alter the homestead protection.

You really need to read the cases to see precisely how this would work.

But while the marriage persists, it would appear that either spouse has an absolute right of refusal to sell or encumber the homestead.  But once that both consent, I do NOT think that either can argue that the failure of one or the other to sign the debt instrument -- the promissory note -- would impair the validity of the mortgage.

Those in other jurisdictions also need to understand that the homestead protections in those places may work very differently.  And not all states recognize the homestead concept nor employ such protections!  This is one of those areas of the law where the law actually varies quite a bit from place to place.
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William A. Roper, Jr.
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Sandy said:
So the sales contract would be related to, for instance, a husband selling the property without the consent of the wife. It would not include a contract to buy the homestead, which the wife did not sign, right?


Sandy, once again, I want to caution that the application of the law will VARY from place to place, but generally, you need to think of a homestead as a designation of a particular piece of property subject to the laws of that jurisdiction.

One doesn't typically BUY a homestead.  One buys a parcel of real estate.

One usually designates a property that is owned as one's homestead.

In most places, either spouse, or a couple acting together, could freely choose to purchase land together or separately.  In places where homestead is recognized, one such parcel, presumably one that is particularly valuable and, usually, the property where they choose to make their home could be designated as their homestead, often by a formal written declaration, sometimes recorded in the public records.

Once such a homestead designation is made, that parcel gets the special protection from conveyance and/or creditors.

Usually, the individual or the couple could freely choose to surrender a homestead designation and might make a new designation of another different property.  But while the homestead designation and protection remains in place, the property would be protected in the ways set forth in the Constitutional provision you cite.

So each party to the marriage would typically be able to go and buy another different property.  But they might not be able to unilaterally surrender the homestead designation without the consent of the other party to the marriage, without first obtaining a divorce ro legal separation.

This can get complex very quickly, and, as indicated, the laws vary quite a bit from place to place.  Or as Moose oftens cautions "your mileage may vary".

Please let this post be a stimulus for further inquiry and research rather than a basis for some speculative conclusion!  Check the law for YOUR JURISDICTION and ASK A LAWYER!
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