When a bank files a foreclosure action, the burden is with them to prove
they are entitled to foreclose. Occasionally, the banks records regarding
a loan are lacking and they need to seek additional relief from the court
to clean up their records and perfect their interest in the loan. Sometimes
this takes the form of a request to reestablish a lost note, or to reform
the legal description in a deed or mortgage. Each one of these additional
requests for relief require the bank to provide sufficient evidence to
prove their case – which in turn means an easier time for a defense
attorney to cast doubt and poke holes in the banks case.
I recently had the fortune of attending trial for one of our clients and
was successful in having the case dismissed. The basis for the dismissal
– the bank failed to prove several elements of the request they
were seeking. In this particular case, the bank asked the court to reestablish
a lost note and to reform the legal description in the mortgage. Both
requests are possible, but they require additional evidence from the bank,
above and beyond a “typical” mortgage foreclosure case. Thankfully,
the bank was ill prepared to deal with our defenses and was unable to
prove to the court that they could reestablish the lost note or reform
the legal descriptions.
Regarding the lost note, there are two essential elements that need to
be proven: that the bank will indemnify (pay for or otherwise protect)
the borrower if someone other than the bank finds the original note and
tries to enforce it against the borrower, and that the bank can adequately
protect the borrower in the event that they have to indemnify them. When
you think of a bank, you tend to think of the large national banks with
billions of dollars at their disposal, so certainly they can afford to
indemnify you. However, when you are dealing with a smaller, less known
bank, some proof may be require to show that the bank can afford to indemnify
you. This was a critical mistake made by the bank in my most recent trial.
They failed to produce any evidence of adequate protection. This was one
of the grounds that the Judge used to dismiss the case.
The reformation of the legal description similar requires two elements
to be proven: a mutual mistake between the two parties who created the
mortgage and the intent of the parties. The court needs to see first that
there was a mistake and that it wasn’t one sided. Next, the court
needs to know what the actual intent was for the parties, so it can reform
or correct the issue. In this case, the legal description appears to have
been missing certain language, which means if the court were to foreclose
on the mortgage with the incorrect legal description, the title on the
property would be clouded and it would be possible that a portion (no
matter how small) of an innocent third party’s land might be foreclosed.
Since we are talking about someone’s home and land, an approximation
isn’t good enough. The court must be satisfied that it is foreclosing
on the exact land, and not a square inch more. Like the adequate protection
issue, here the Plaintiff failed to produce any testimony or evidence
to support these two elements, and served as another reason for the Judge
to dismiss the case.
At the end of the day, a “typical” foreclosure action might
not be so typical or simple. The law allows for a lot of mistakes to be
corrected, but it must be done right. Had our client not been represented,
I’m confident the bank would have been granted a wrongful foreclosure
judgment against our client and nothing would have been done to stop them.
If you are facing foreclosure and would like to discuss what options may
be available, please contact Loan Lawyers and let us help save your home.