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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InCalifornia
Hello All!

Does anyone happen to have any California case law (or know where I can find it) on fraudulent signatures of notaries? I've just received an official copy of the notary's signature from the Secretary of State and it is obviously different that the signature that appears for this notary on my Substitution of Trustee that is filed in the Recorder's Office (which is a one letter squiggle thing).

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William A. Roper, Jr.
I do NOT have any specific knowledge of California law or cases, but I fear that what I do know of the law in this area (correctly or incorrectly) is not going to give you any great reason for encouragement.  Bear in mind that I am NOT a lawyer and I am therefore at best giving you may lay impression of the law as a discussion amongst pro se peers.  In short, this is NOT legal advice, but rather simply a discussion to help you in framing your own primary investigation and research.  Because the law of real property varies from place to place, I would highly recommend that consult with a qualified and licensed California attorney.

This having been said, I was always taught that the fundamental principal underpinning most real estate transactions, including both mortgages and assignments thereof, is the so-called statute of frauds.  The statute of frauds varies from place to place, but I believe that a statute of this sort is enacted in all fifty states.

Generally speaking, the statute of frauds provides that all contracts for the sale of interests in real property must be in writing and executed by the grantor or a person acting with the grantor's express written authority.

In most places, it is NOT necessary to notarize a document to create a valid deed.  Similarly, notarization is NOT required in most places to create a valid, mortgage, deed of trust or other mortgage security instrument.

HOWEVER, notarization IS necessary in most places for an instrument to be recorded in the public records.  Public recording is provided for by the recording statutes of various jurisdictions.

Generally, under the common law the rule is first in time, first in right.  That is if A deeds a property to B and then subsequently deeds the same property to C, B typically has the superior title under the common law, because his or her deed came first.  The recording statutes displace the common law by providing that the first to record has the superior right.  There are several variants of the recording statutes, including "race", "notice" and "race - notice".

IF John SMITH executes a deed to Blackacre in favor of Joseph JONES, but the deed is not authenticated by a notary, JONES might find that he has a legally valid and enforceable deed to Blackacre, but that the deed is ineligible for recording.

This will not usually impair the enforceability of the deed per se, but could cause problems if SMITH is a CROOK and subsequently deeds Blackacre to someone else.  That subsequent purchaser, checking the public records (which do NOT contain the defective deed), thinks that SMITH still owns Blackacre and is expecting to obtain a valid deed from SMITH.  The subsequent purchaser, acting in good faith and without notice of JONES' claim purchase Blackacre from SMITH (who no longer really owns it), MIGHT find that he has a superior deed than the unrecorded prior deed received by JONES as long as the subsequent purchaser records his deed first.

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Since your query relates to a notice of appointment of substitute trustee, you are probably now wondering why ROPER is talking about deeds.  I use deeds as an example, because I believe that you are going to find that similar principles apply.  And I believe that these same principles would also apply in the instance of a defectively authenticated assignment of mortgage, deed of trust of other mortgage security instrument.

There are two separate questions that might be asked of each instrument. 

First, is the instrument properly executed by the grantor or a person validly acting on the grantor's behalf.  That is, does the person executing the instrument have the authority to execute it.

Second, is the document properly authenticated.

If the first question is answered in the affirmative, then the instrument is probably valid.  If the latter question is answered in the negative, then the instrument is probably not eligible for recording.

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If you go to court and argue that the authentication is defective, it seems to me that you are really arguing that the instrument was ineligible for recordingThis would NOT seem to me to be a particularly persuasive or potent defense in a foreclosure action.

It MIGHT be persuasive in a suit to have the Clerk or Recorder strike the recorded instrument from the public records, but it would not seem to this pro se litigant to effect the validity or enforceability of the instrument.

There are two possible exceptions to this general rule.  First, impeaching the authentication MIGHT call into question the validity of the execution itself.  But this is problematic as the execution of the instrument is probably PRESUMED to be regular UNLESS proven otherwise in most jurisdictions, even absent the notarization.  You are probably on far firmer ground in arguing that a signature of the person executing the instrument is a forgery (which implicates the validity of the instrument directly) rather than arguing only that the notarization is defective.

Secondly, a defective authentication MIGHT render the deed void in some jurisdictions if it was shown that the instrument was altered after its execution.  Generally, material alterations of an instrument after authentication can render an instrument VOID.  So IF the deed had NO ACKNOWLEDGEMENT and then it was altered to include a forged acknowledgement, this might defeat the deed under law relating to alteration of instruments.

Finally, it is essential to bear in mind that under basic contract law, transactions enterred into by a party lacking authority can very often still be made valid by the subsequent ratification of the party purporting to act on its behalf.  So even if the person executing the instrument lacked authority, if the entity ratifies the transaction, the impeachment of the authority may not be particularly helpful.  Now as to standing in a traditional judicial foreclosure, the specter of ratification raises the rather vexing question of WHEN did the ratification take place and when is it effective.

Overall, I do not believe that you are going to find this to be a particularly productive avenue.  But I would encourage you to read the law of your jurisdiction as it pertains to: (a) the statute of frauds, (b) the recording acts, (c) laws relating to notaries and notarization, (d) agency, authority and ratification and (e) alteration of instruments.  Please let us know what you find out!  Best of success!

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