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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There is no property description in my mortgage.. Mortgage has been recorded in Michigan...

434 B.R. 493 (2010)

In the matter of Mary P. BRANDT, Debtor,
Wells Fargo Home MortgageInc., Defendant-Appellant.
v.
Thomas C. Richardson, Plaintiff-Appellee.


 If I am reading this decision correctly, then in MICHIGAN without references to the Plat page and Lot numbers the mortgage is a nullity.

Is this a correct assumption? looking for your opinion, not legal advice..

Adam
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Moose
No, I don't think it makes an improperly recorded mortgage an automatic nullity.

Why Wells didn't file an amended document is a good question - guess they decided to fight it out and get a ruling on their argument.

Generally speaking, those kinds of errors of omission can be corrected via amendment.

A good question for the issuer of the title policy and the firm that conducted the closing on your house.

Moose


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Adam
Title Insurance... lol.... They ran title insurance on a completely separate piece of property.

t.


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William A. Roper, Jr.
Quote:
Adam said:
If I am reading this decision correctly, then in MICHIGAN without references to the Plat page and Lot numbers the mortgage is a nullity.

Is this a correct assumption? looking for your opinion, not legal advice..
 
Adam:
 
While not disagreeing with Moose's response, I would disguish and elaborate in several respects.  At the outset, I want to emphasize that I have NOT researched this issue in respect of Michigan law.  You need to look to Michigan statutes and cases for the answer.  And it is very much in your interest to consult a qualified Michigan attorney specializing in real estate (and, perhaps, equity) for a surer answer.
 
First, I would suggest that there is very likely to be some Michigan case law such as that discussed within the thread linked below and pertaining to incomplete instruments:
 
"Distinguishing Indorsement In Blank and Assignment In Blank"
 
 
Some of the cases from other jurisdictions discussed therein would seem to support the proposition that a deed or mortgage that was incomplete as to an essential element might be VOID.  See for example the language from this ancient Illinois decision:
"The law is well settled that a deed without the name of a grantee is invalid. It is said there must be in every grant a grantor, a grantee, and a thing granted; and a deed wanting in either essential will be void." Richey v. Sinclair, 167 Ill. 184, 47 N.E. 364 (Ill. 1897).
*
 
The precise wording of the Michigan Statute of Frauds may be very important to such an analysis and the cases on the Statute of Frauds probably hold the first element of the answer.
 
But even if you found one or more Michigan cases holding that the absence of a property description is fatal to an instrument, the analysis probably doesn't END there.  It would seem to me to be merely the beginning of a thoughtful inquiry.
 
*
 
Even IF a deed or mortgage was found to be wanting and even VOID, this would NOT necessarily leave the purported grantee without a remedy.  There is a branch of Equity having to do with reformation of contracts, deeds and instruments.
 
Under equitable principles, a court will very often look to the intention of the parties.  This inquiry typically begins with the express language found within the four corners of the instrument.  But implicit in the very creation and exceution of the instrument is the rather clear idea that the parties intended that a mortgage be created to secure the note.  And therefore to simply VOID the instrument seems contrary to this implict intention.  Moreover, the mortgagor might thereby be unjustly enriched.
 
Putting this another way, would it be fair to you if YOU had been the grantee of a mortgage granted by someone else in which the property description was omitted.
 
So a court would probably look to other indications of the express intentions of the parties in respect of the mortgage at issue.
 
For example, Did your mortgage application identify the subject property?  Did the original Lender obtain an appraisal of the subject property?  Does the loan file contain a copy of the tax assessment for the property?  Were the taxes for this property taken into account in underwriting the loan?  Was the property mentioned in other closing documents, such as the HUD-1 Settlement Statement, the TIL Disclosure, other statutory disclosures?
 
Moreover, were the proceeds of the loan used to purchase that particular property?  Or were the proceeds used to pay off another loan secured by the property?
 
And the evidence wouldn't end with an inspection of the primary documents associated with the original loan.  You could be deposed under oath and asked about your understanding and intentions with respect to the loan.
 
*
 
Let me here distinguish between some alternative hypothetical fact situations and possible outcomes.
 
First, let us suppose that Smith purchases "Blackacre" from Jones and the purchase is funded with money advanced at closing by the Friendly Mortgage Company, Inc.  Let us further suppose that Smith applied for the loan identifying "Blackacre" in his application.  Further, the Friendly Mortgage Company obtains from Smith a copy of the contract of sale identifying Blackacre as well as a copy of the tax assessment from Smith.  Friendly underwrites the loan in respect of tax charges on the property.  Friendly obtains an appraisal of Blackacre.  Friendly also has an engineer/surveyor complete a survey or survey opinion/plot plan of Blackacre.
 
The loan commitment letter expressly identifies Blackacre.
 
At closing, the HUD-1 Settlement Statement reflects that the loan made by Friendly is in respect of the purchase of Blackacre.  Smith signs the HUD-1 Settlement Statement, as well as a Lead Paint Disclosure describing possible hazards associated with Blackacre.  Jones is paid from the proceeds of the loan.
 
But the mortgage omits the property description or any other identifying information for Blackacre.
 
Under holdings in respect of an incomplete instrument, the mortgage might seem to be VOID.
 
But I believe that you would find almost universally that Friendly Mortgage would be entitled to a reformation of the mortgage to include the property description under these hypothetical facts.
 
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William A. Roper, Jr.
-- continued --

Now let us consider another contrasting example.

Suppose that Smith owns ten (10) unimproved, unencumbered five acre lots in fee in the Blacksoil subdivision in Washington county and an additional five (5) unimproved, unencumbered five acre lots in the Shadydale subdivision in adjacent Jefferson county.  Smith also owns a home in Adams county.

Smith has some immediate cash flow needs and approachs First Bank to borrower $25,000.

Smith completes an application for an unsecured loan.  Thereafter in reviewing the loan application, First Bank indicates a willingness to lend Smith $25,000 but desires security.  Smith agrees to think about this proposition and indicates that he might be willing to offer the security of one or two lots.

Thereafter, nothing more is said or discussed in respect of the identification of any particular property.  At closing, Smith is presented with a mortgage which fails to identify ANY property.  Smith signs this along with other documents, not fully understanding that he is signing a mortgage.

First Bank compounds its mistake in failing to identify ANY of Smith's properties by recording the mortgage instrument in Jackson county, a place where Smith owns no property at all.

*

Under these facts, I think that many people would agree that the mortgage is not only incomplete, but also that a court of equity might have some difficulty in reforming the mortgage.  Reformation inherently is an attempt by the court to give effect to and carry out the intentions of the parties.

Where Smith merely agrees to think about giving security of one or two lots, it is difficult to ascribe that he had decided to do so, even with his signature on the incomplete instrument.  And IF the court agreed to a reformation, which lot(s) should serve as security?

At the very best, First Bank MIGHT be able to get a court to agree to a reformation that involved letting Smith CHOOSE one or two properties through belated identification, but even this seems to be a bit of a reach.

These facts do not so much support a conclusion that the parties agreed to a mortgage as much as reflect a failure to actually EVER agree.  Only upon Smith's testimony (against interest) that he intended to give a mortgage on a lot or two would I be inclined to find against Smith.

And in such an instance, I would think that the incomplete instrument cases would probably first show the mortgage instrument to be VOID and that a reformation might NOT be actually available.

*

Let us take this second example a step further.  Suppose that after the initial defective mortgage that Smith succeeded in borrowing money from Second Bank in respect of a blanket mortgage on the ten unimproved lots in Washington County and further borrowed money from Third Bank in respect of the properties in Jefferson county.  Both Second Bank and Third Bank carefully checked the deed records in the correct county and found these lots unencumbered.  And each also immediately recorded their mortgage.  Moreover, suppose that Smith had filed a declaration of homestead on his property in Adams county prior to the original transaction with First Bank.

Do you think that First Bank would have a prayer in obtaining a reformation of its mortgage to secure a lien senior to the liens recorded by Second Bank or Third Bank?  Or would the unspecified property description entitle First Bank to a lien on the homestead which was never contemplated as security and possilby protected by a State Constitutional homestead protection?

*

I think that you can see the rather sharp factual distinction!

*

The Bankruptcy Variant
Finally, let us take the factual situation presented in the second example sans mortgages to Second Bank and Third Bank.  Instead, let us suppose that Smith files for Bankruptcy protection in respect of his various debts, listing the First Bank loan as unsecured.

Under the Bankruptcy Code, the Bankruptcy trustee might very well be entitled to treat First Bank as an unsecured creditor in respect of either the failure to identify the property in the original mortgage OR the failure to properly record the mortgage in the correct county OR BOTH.

And it is this latter instance that I think is contemplated by the case that you originally cited (In Re Brandt).  Basically, under the Bankruptcy Code, the trustee can ask to be treated as an innocent purchaser of the interests in the estate real estate and the failure to properly perfect security can defeat the improperly recorded (OR improperly executed) instruments.

Contrast the situation in the first example.  IF the purported mortgagee obtained a court ordered reformation in advance of Bankrupty, I suspect that it would be a secured creditor.  But if the grantee First Bank waited until after a Bankruptcy filing to assert its claim, I would think that First Bank might be found to have an unsecured claim I believe that the trustee or debtor in a bankruptcy setting would have a very strong argument that ANY substitute trustee's deed was absolutely VOID. 

*

Finally, in closing, I would submit that upon the facts that you describe in your original post, it seems plausible that a non-judicial foreclosure sale conducted by a substitute trustee in respect of a mortgage which failed to identify the subject property AT ALL might very well be found to be VOID.  That is, while a mortgagee might be eligible to obtain a reformation of the mortgage to include the property description, such a reformation would NOT be possible simply by fiat and assertion by the mortgagee and/or substitute trustee.

Whether it would be helpful to file a Bankruptcy petition in this situation is UNCLEAR and highly dependant on the borrower's other financial circumstances AND the nature of the various state exemptions applicable to bankruptcy in a jurisdiction.

*

IF you are still IN POSSESSION of the subject property, I would NOT want to be litigating on these fact in a quiet title action as is so often urged by some less thoughtful Forum participants.  Instead, I would want to be defending and pointing to the inherent DEFECT in the substitute trustee's DEED in the inevitable unlawful detainer or similar ejectment action.

It seems to me that a plaintiff in such an action would have an almost insurmountable burden of proof in asserting the validity of a trustee's deed where there was no property description in the mortgage.

BUT I WOULDN'T DO ANYTHING WITHOUT DISCUSSING THE SITUATION WITH THE SHARPEST MI BANKRUPTCY AND/OR REAL ESTATE LAWYERS THAT YOU CAN FIND AND AFFORD.  AND I REALLY WOULDN'T WANT TO BE LITIGATING ON THESE FACTS PRO SE IF I FOUND THAT THE LAW WAS STRONGLY IN MY FAVOR ON GETTING THE LIEN EXTINGUISHED THROUGH A BANKRUPTCY FILING.  I WOULD WANT TO BE DOTTING MY "I"S AND CROSSING MY "T" AND WOULD WANT THE VERY BEST POSSIBLE REPRESENTATION SO THAT I COULD SUCCESSFULLY CLEAR THE LIEN AND GET THE DEBT RECOGNIZED AS UNSECURED.  WHY GAMBLE?
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William A. Roper, Jr.
NOTE:  As a closing note, I would observe first I AM NOT AN ATTORNEY AND THIS IS NOT LEGAL ADVICE.  Secondly, I would point out that the posts above were written extemporaneously informed only by previous reading of law in other jurisdictions and my business experience, but that I undertook NO RESEARCH WHATSOEVER in support of any of the assertions therein.

In particular, I would expressly encourage others to independently RESEARCH and CRITIQUE my analysis.  I would be particularly appreciative of the critique and correcting analysis of Moose, whom I particularly respect!  If I have made statements which are legally erroneous or questionable, please IDENTIFY the mistakes!!
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lisa
@GeorgeBurns

What do you think of roper's post about this?
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George Burns
It was an excellent response. Unfortunately, but necessarily deep and detailed, which is Roper's style. I am not physically able to write or research as I used to or would like, otherwise I would try to simplify it. But it really should not. Readers should make the effort to read and digest every word of it. If need be, ask him to clarify or expand on any aspect.

Equity (fairness) and the reformation of contracts require detailed, well reasoned and well supported arguments to be properly presented to the court. I also advise the use of an expperienced lawyer. Interview thoroughly and get case experience cites and  references. Simply being a lawyer means nothing. Your Dentist  is Dr. X. Does that Dr. qualify him to advise you about your cardiac problem?

The last analogy made me laugh.  The scenario and fact pattern remiinded me of an old lawsuit where the Plaintiff accused me of Fraud  and asked the Judge for a Writ of Replevin. There was such a lack of description of the notes along comingling of funds and accounts that reformation etc was impossible  except by the person who actually engineered the transactions, and he wasn't telling.
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Moose
William A. Roper, Jr. wrote:
-- continued --

...

Under these facts, I think that many people would agree that the mortgage is not only incomplete, but also that a court of equity might have some difficulty in reforming the mortgage.  Reformation inherently is an attempt by the court to give effect to and carry out the intentions of the parties.

...

 Under the Bankruptcy Code, the Bankruptcy trustee might very well be entitled to treat First Bank as an unsecured creditor in respect of either the failure to identify the property in the original mortgage OR the failure to properly record the mortgage in the correct county OR BOTH.

And it is this latter instance that I think is contemplated by the case that you originally cited (In Re Brandt).  Basically, under the Bankruptcy Code, the trustee can ask to be treated as an innocent purchaser of the interests in the estate real estate and the failure to properly perfect security can defeat the improperly recorded (OR improperly executed) instruments.

...

BUT I WOULDN'T DO ANYTHING WITHOUT DISCUSSING THE SITUATION WITH THE SHARPEST MI BANKRUPTCY AND/OR REAL ESTATE LAWYERS THAT YOU CAN FIND AND AFFORD.  AND I REALLY WOULDN'T WANT TO BE LITIGATING ON THESE FACTS PRO SE IF I FOUND THAT THE LAW WAS STRONGLY IN MY FAVOR ON GETTING THE LIEN EXTINGUISHED THROUGH A BANKRUPTCY FILING.  I WOULD WANT TO BE DOTTING MY "I"S AND CROSSING MY "T" AND WOULD WANT THE VERY BEST POSSIBLE REPRESENTATION SO THAT I COULD SUCCESSFULLY CLEAR THE LIEN AND GET THE DEBT RECOGNIZED AS UNSECURED.  WHY GAMBLE?


Mr. Roper raises the important point that bankruptcy trustees essentially step in and become independent third parties.

One other thing to consider - this was a chapter 7 case; we do not know if the trustee liquidated the house and used the proceeds to pay other creditors or not.

Moose
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Moose
Adam wrote:
Title Insurance... lol.... They ran title insurance on a completely separate piece of property.

t.




Okay - given that the statement makes no sense ("ran title insurance"?), I'll at least briefly try another approach.

The liability for error (the failure to include the property description) is the issue.

Depending on where/when that error occurred (Seller? Prior closing agent? Closing agent? Title Company?) you may not have a valid interest in your home.

Moose

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Adam
Quote:
Okay - given that the statement makes no sense ("ran title insurance"?), I'll at least briefly try another approach.

The liability for error (the failure to include the property description) is the issue. 

Depending on where/when that error occurred (Seller? Prior closing agent? Closing agent? Title Company?) you may not have a valid interest in your home.

Moose

The title insurance that was suppose to be done when the mortgage in question was closed, that title insurance was on another property (other property as in another city)..

Since this was refi... has no effect on the validity of my interest in the home.

The effect of that, if any, on my case will be in the securitization process, but that is a tricky one.... So its most likely just a dart to throw, not a bullet to the heart and certainly not a hand grenade.
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Adam
OK... re-read my post.. still sounds unclear.

When refinancing a mortgage on the house, the new mortgage company instead of obtaining title insurance on the house that was being refinanced; they obtained title insurance on another, completely separate piece of property.

There hopefully that is better.. lol 
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William A. Roper, Jr.
Quote:
Adam said:
Since this was refi... has no effect on the validity of my interest in the home.


As long as the property description in the deed granted to YOU is correct, it would not seem to me that you have a title insurance problem.

Moose is correct that the Lender would tend to look to the Lender's title insurance policy.  It is unclear whether it the the Lender, the Lender's attorney, or the closing agent (including a title insurer) which actually made the error.

Usually, the Lender's loan closing department prepares a "loan closing package" to include the mortgage instrument.  The more prudent "belt and suspenders" approach would be to expressly include the property address within the mortgage and then to also append the legal description of the property as an exhibit.

Very often, the legal description is simply photocopied from the exhibit showing the legal description taken from the grantor's deed obtained either at closing or from the title search and exemination.

(If the property address appears within the mortgage and ALL that is missing is the legal description of the property, then I wouldn't think that this would be a fatal defect AT ALL.)
So in common practice, the loan closing department would include the property address on the mortgage instrument and then the closing agent would append the legal description taken from the prior deed.  Both would seem to me to be somewhat culpable where no mention of the property was made at all.

If the Lenders' title insurance policy was issued on another property, this could be problematic for the Lender in enforcing a claim, though once again, there is the matter of reformation.

It may very well be that the error associated with the title insurance policy and the omitted description are inter-related.  For example, IF in preparing to submit the mortgage for recording it was noticed that the legal description appearing in the title search and examination DID NOT MATCH, they might have set the mortgage aside and then forgotten about it.  That is, they may have refrained from attaching the erroneous title description shown in the title policy, but then ultimatley neglected to correct it.

This is what the quality control function in the loan closing department is intended to CATCH.

Quote:
Adam said: 
The effect of that, if any, on my case will be in the securitization process, but that is a tricky one.... So its most likely just a dart to throw, not a bullet to the heart and certainly not a hand grenade.
 
In my previous examples, I suggested that the mortgage investor might be able to successfully petition a court for a reformation in respect of the various loan documents and representations which show the intent of the parties that a particular property be the subject of the mortgage lacking the property description.
 
It seems to me that the title policy issued on the wrong property is one piece of dissonant evidence that might seem to show that another property (other than the subject property) was actually the intended subject of the mortgage.
 
*
 
I want to underscore one other point about the perils of representing oneself pro se.
 
Even where the Lender might have a very strong and valid case for reformation, there could still very well be a proof problem.
 
The originating Lender shown on the original loan documents may now be out of business.  The loan might have been sold between multiple entities, landing in a securitized trust.  The servicing right may have been sold one or more times.
 
This presents a challenge for the Lender in authenticating the business records which would otherwise support the claim for reformation.
 
An experience trial lawyer could probably get much of this evidence excluded and might even be able to obtain a defensive summary judgment in respect of the exclusion of improperly authenticated evidence.  The chances of a pro se litigant achieving this are far more remote, simply because the pro se litigant is usually not going to know how to properly raise and frame the objection and to support it with good authority in respect of Rules of Evidence and case law.
 
But there is even another more serious problem.  The pro se litigant is probably his or her worst witness.  The plaintiff's surest way yo salvage the losing case is to put the defendants on the stand and ask them under oath about the authenticity of the documents and to get sworn admissions about the intentions of the parties.
 
In most jurisdictions, a civil litigant is NOT REQUIRED to attend a hearing or trial in person UNLESS subpoenaed or ordered by the court to appear.
 
I am acquainted with one represented litigant who was defending against a judicial foreclosure (having survived summary judgment) who imprudently attended the trial when NOT subpoenaed and facing evidence which could not possibly be validated by the plaintiff's sole witness, an employee of the successor servicer.
 
The judge excluded the plaintiff's authentication of the documents.  The plaintiff then put the defendants on the stand and obtained the necessary testimony to authenticate the otherwise excluded evidence.
 
By attending the trial, the defendants snatch DEFEAT from the jaws of victory.
 
If you are the ONLY witness who can authenticate the evidence necessary for the plaintiff to obtain a judgment of reformation, WHY would you want to be representing yourself pro se?  You WILL be sworn and put on the stand.  Then, your testimony will assure the loss of your home.  Wouldn't it be better to be traveling in another state at the date of the trial and let well qualified attorney get the case tossed?
 
*
 
These facts also reflect the advantage of defending rather than seeking affirmative relief.  You do NOT want to be bearing the burden of proof.  It is better that the plaintiff bear the burden of proving the validity of its non-judicial foreclosure OR bear the burden in seaking reformation.
 
Those fools who would have you bring a quiet title action are inviting disaster!
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