Punishment for Lenders playing “Fast and Loose” with the rules?

21 Jan Punishment for Lenders playing “Fast and Loose” with the rules?

Some good news for homeowners on the foreclosure front, and bad news for those lenders playing fast and loose with the rules regarding recording of mortgages and assignments.

In a recent case in Sussex County, Judge William McGovern III, J. S. C. discovered a “serious matter” relating to the recording of title and mortgage records. The court concluded that a recorded document (an assignment of mortgage) used in the prosecution of a foreclosure matter was apparently forged.  The actual mortgage was dated June 29, 1998.  After several assignments in 1998, the plaintiff in this action (the purported assignee) did not purchase the note and mortgage until 2005.  The problem for the plaintiff lender was that the document which purports to be the assignment relating to that 2005 transfer is an exact duplicate of an earlier 1998 assignment, and the assignment purporting to assign the Note in 2005 was signed and dated in 1998!

The Court went on to warn that recording such fraudulent documents is a violation of criminal law. As a result of such criminal activity, the Court dismissed the foreclosure complaint with instructions that no new foreclosure action may be filed or commenced until the fraudulent documents had been properly corrected and rectified. In addition, the Court warned that the parties responsible for the creation and transmission of the bogus document should be identified and held responsible for that action, and an appropriate investigation should be conducted into such actions.

The Court concluded that “forging of a document, and transmission of a forged instrument, to the County Clerk for recording, represents a serious breach of and damage to the integrity of the land title records and the function of the recording system.”

Finally, this Court was willing to listen to the arguments that virtually all foreclosure defense counsel have been arguing for years; namely, that lenders often do not have the appropriate documentation to support the chain of title to their claim to foreclose on a homeowner’s property and have improperly created documents to support that claim.  Under such circumstances, no lender should not be permitted to take a person’s home without the proper documentation to support that claim.
This blog post is not considered to be legal advice, and is intended for educational purposes only.  For more information regarding any of the foregoing issues discussed above, please contact Robert F. Schillberg, Jr. (rschillberg@schillberglaw.com).