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Appellate Win for the Borrower

The idea of what all a bank needs to prove their case at trial has been discussed here before. What kind of relief the bank is seeking and the type or quality of documents available to them will often dictate how they go about trying to prove a foreclosure action. These guidelines hold true when it’s a “standard” foreclosure or one a little more complicated. However, as a foreclosure lawsuit deviates away from the “standard”, more specialized evidence might be required to prove the bank’s case. I recently had the opportunity to assist a client on an appeal whereby the bank failed to treat a more complicated case with the attention it deserved.

Our client came in with a pending foreclosure action that ultimately proceeded to trial. One of the unique claims from the bank was that they wanted to reform the mortgage. Reformation of a mortgage is the request to change or alter something about the mortgage to reflect the actual intentions of the parties at the time the mortgage was create. You often see this type of relief in regards to typos or clerical errors. Sometimes the street address includes a minor mistake such as “NW” instead of “NE”. Other times, the legal description of the Mortgage fails to include some archaic legalese that is required for title related reasons. Generally speaking, someone seeks to reform the Mortgage because while both parties agree a contract/Mortgage was created, some minor issues exist regarding the language or wording used that is not in line with the intent of the parties. In order to prove reformation, the party (bank) requesting it must show a mutual mistake and the intent of the parties.

We initially won our trial based on the idea that the bank failed to prove the elements necessary for a reformation of the mortgage. The bank’s witness was more than happy to admit that the legal description in the Mortgage was incorrect, but they failed to put forth any evidence to the Court to show what the correct legal description should be. Without this proof, the Court could not grant the relief the bank sought – to reform the correct the legal description, which had a snowballing effect of the case ultimately being dismissed. Needless to say, our client was thrilled.

After losing the trial, the bank tried to convince the Court to change its mind by requesting a rehearing, which was also denied. As their last option, the bank asked the Appellate Court to intervene and overrule our dismissal. The banks primary argument was that they did not need to prove reformation because the Court has the authority to reform a mortgage even when unproven. Furthermore, the bank asked the Appellate Court to find in the record the proof the bank needed to submit at the actual trial, which they otherwise failed to do. It’s a bit of being a Monday morning quarterback – the bank essentially asked the Appellate Court to fix the mistakes they created/failed to prove at trial. When a unique or complicated issue presents itself all throughout the case, you would think more attention would be provided to that issue, to make sure it’s properly proven at trial. The bank failed to so at the trial level and thankfully, the Appellate Court agreed with us and declined to overturn the dismissal.

At the end of the day, the law is an exercise in paying attention to detail and the better prepared side has a much bigger advantage. I’m proud to say that this client’s case was ultimately dismissed based in part on Loan Lawyers attention to detail. If you are having trouble with your mortgage or any other debt related issues, reach out to our office and let us help you find a solution.