19 Mar Missing Name in Notary Acknowledgment Really Means Bad Mortgage in Massachusetts
A decision allowed a bankruptcy trusteeset aside a mortgage under Massachusetts law, where the name was missing from the notary’s acknowledgment. “Money moves electronically, but paper moves at human speed.”I wrote that for the first decision. The borrower had signed the mortgage, but the notary public was hurried and didn’t write in the borrower’s name where it belonged in the notary clause.
That case has now been affirmed on appeal. The lender then paid $120,000 to the trustee to keep the mortgage. Wow !! Good news for the trustee. Neutral for the borrower, as nothing in the decision voided the enforcement of the mortgage against the borrower.
I’ll repeat that. The lender paid $120,000 to the trustee. $120,000.00. It all went to the creditors.
It won’t be easy for a debtor tobenefit from this kind of mistake.The mortgage, even though poorly notarized, is still enforceable against the borrower. The suggestion has to be made to the lender that the borrower will sign new documents ifsome benefit is given in exchange. Otherwise, the bankruptcy case will be filed and the lender is at the trustee’s mercy.
Lenders will not easily react to give a benefit to a borrower. They just don’t like owning up to a mistake and reducing a debt owed to them. (Of course, they don’t mind increasing such a debt through their outrageous fees.)
If negotiations with the lender are not successful, the borrower with this defective mortgage (you?) should consider a Chapter 13 filing instead of Chapter 7. A Chapter 13 debtor has rights of a trustee to set it aside. But, instead of simply seeking cash for the creditors, the debtor could ask formore favorable terms which benefit – the debtor !!
This requires serious legal advice. Do not try this at home. It will be difficult to get someone in authority on the lender’s side of the table to realize the seriousness of the problem.
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