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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From Home Equity Theft Reporter:

Ohio Court: Improperly Notarized Mortgage Does Not Attach As Lien To Property, Leaving Earlier-Recording Lender In Lien Priority Dispute Holding Bag

Lexology reports:
  • The mortgage was not properly executed because the borrower / mortgagor’s signature was not notarized as required by Ohio Revised Code Section 5301.01. The mortgage was appropriately recorded despite the deficiency. With record notice of the current mortgage (and possibly actual notice too), a second lender advanced money to the same borrower and recorded a properly executed mortgage. The latter mortgage was recorded about two years after the first, improperly executed, mortgage was recorded.


  • When the owner of the mortgage recorded second filed for foreclosure and the two lienors decided to dispute priority, Lucas County Judge Frederick H. McDonald had to determine if Ohio Revised Code Section 5321.23 (the first-in-time is first-in-right statute) was applicable.


  • In OneWest Bank v. Dorner, 164 Ohio Misc.2d 63 (Lucas County 2011), he decided that the statute did not apply because the first filed mortgage was defectively executed.


  • Judge McDonald based that decision on: (i) an Ohio Supreme Court case which he said holds that a defectively executed deed does not transfer property such that a later creditor of the transferor cannot get that property, National Bank v. Denison, 165 Ohio St. 89 (1956); and (ii) an Ohio Appellate case that he said holds that a defectively executed mortgage does not create a lien on property that has priority over the subsequent lienor, MERS v. Odita, 159 Ohio App.3d. 1 (2004) (“Although a defectively executed mortgage is not entitled to record, even if it is recorded, the defective mortgage is treated as though it has not been recorded.”)


  • The holder of the first filed but defectively executed mortgage was an assignee. Asserting that the situation was not its fault and that fairness should place in first position the true first lienor, especially since the true second lienor had knowledge of the first lien, the first mortgagee asked Judge McDonald to do equity.


  • Judge McDonald declined the opportunity to apply equitable principals to correct the error made by the original should-have-been-first mortgagee despite the lament that the plaintiff / holder of the mortgage recorded second was allegedly unjustly enriched.

For the story, see Improperly executed but properly recorded mortgage isn't a lien (may require subscription; if no subscription, GO HERE; or TRY HERE - then click appropriate link for the story).

For the trial court ruling, see OneWest Bank v. Dorner, 164 Ohio Misc.2d 63 (Lucas County 2011).

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Digger
Here is another story from Home Equity Theft Reporter.

Texas Homeowner, Chase Settle Suit Over Improperly-Filed Mortgage Lien Release That May Have Led To 'Free House'

In San Antonio, Texas, the San Antonio Express News reports:
  • Chase bank has dropped its lawsuit against a San Antonio couple who in 2002 were mistakenly released from having to make any more house payments. The bank and Ramiro and Delia Guerrero Jr. have reached a settlement that will require the couple to pay a portion of their $86,750 mortgage note. Stephen Cochran, the couple's lawyer, declined to disclose the amount.


  • The Guerreros will not have to pay any late fees, penalties or taxes, he added. “What we're going to do is renew, extend and modify that original note and lien so it will be a different number (with) longer terms,” Cochran said.


  • Chase sued the couple on Sept. 16 in U.S. District Court in San Antonio seeking to rescind the mortgage-lien release that was recorded in error nine years ago. The bank voluntarily dismissed the suit last week.

***

  • In an Oct. 11 Express-News story, Cochran said the couple stopped making their payments after a 2001 refinancing.(1)He cited the lender apparently losing the note at the time and the couple's confusion over where to send their payments as reasons why they stopped making payments.


  • Nevertheless, Cochran said, a lawsuit seeking to rescind the mortgage-lien release needed to be filed within four years of the recording of the release under the statute of limitations.


  • Cochran said he believed he had a strong case, but he said fighting Chase's suit would be “kind of like betting the farm.” “If you win, you win, but if you lose, you lose big,” he said.


  • He added that a judge could have ruled in Chase's favor and declared the Guerreros owed the money, raising the prospects of a possible foreclosure. Plus, he said, it was never the Guerreros' intent to try to get a “free house.”

For the story, see Settlement reached in mortgage case.

(1) See Chase Sues To Collect On Erroneously-Released M'tgage; Homeowner Admits Owing Money, But Leans On Statute Of Limitations To Tell Bankster To Get Lost.

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BobbieF
I read that Chase case as a win for the bank.  Not the home owners.  If the statute of limitations had run out, the bank legally had no case. Between this case going to court, the judge not throwing it out, and the defenses lawyer compromising comes the echoing sounds of cha ching!
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