Financially challenged homeowners refi a loan in Michigan; but sign while on vacation in California. You’ll have to really read the whole case. Bank Rep in California inadvertently DOES NOT get their signature on the mortgage. They DEFAULT and when the inevitable foreclosure ensues, they file Chapter 13. Bank files a proof of claim WITH a Michigan signed, notarized and recorded mortgage. Which is an impossibility as they were in California when they signed. Bankers are tagged by court with “unclean hands” and mortgage is adjudicated “void ab initio”. Then the fur really starts to fly!
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
In re: DANIEL JOSEPH SUTTER; SHERYL LYNN
DANIEL JOSEPH SUTTER; SHERYL LYNN
U.S. NATIONAL BANK; SAXON MORTGAGE
Appeal from the United States District Court
for the Eastern District of Michigan at Detroit.
No. 09-11816—Anna Diggs Taylor, District Judge.
At the April 8 closing, the Sutters signed a note payable to World Wide in the amount of $78,000. The Sutters …. apparently did not sign a mortgage instrument ….
Within a few months of the closing, the Sutters began to fall behind on their payments on the World Wide mortgage. When Appellants initiated foreclosure proceedings, the Sutters filed a Chapter 13 bankruptcy petition on November 21, 2005.
Saxon filed a proof of claim in the Sutters’ Chapter 13 case asserting a secured claim in the amount of $83,498.26, secured by the Sutter property. Attached to the proof of claim was the World Wide mortgage, notarized and ostensibly bearing the signatures of the Sutters. The certificate of acknowledgement on the World Wide mortgage states that “[t]he foregoing instrument was acknowledged before me [the notary] this April 8th, 2004, by Daniel J. Sutter and Sheryl L. Sutter, his wife” in the State of Michigan, County of Oakland. The mortgage was recorded with the Lapeer County, Michigan, Register of Deeds on May 25, 2004.
The Sutters filed an objection to the proof of claim, alleging that it should be disallowed because their signatures on the mortgage instrument were forged.
Counsel for Appellants conceded at oral argument in this appeal that the mortgage was forged, and Appellants also noted that a claim has been filed against the bond of the notary who attested to the alleged signatures of the Sutters. Accordingly, the district court’s factual finding that the World Wide mortgage was forged is not clearly erroneous.
At the heart of this argument is the concern, expressed by the bankruptcy court at the April 2007 hearing, that the Sutters will receive a windfall in the form of a “free house,” particularly as it is undisputed that the Sutters intended to grant a mortgage interest to World Wide.
Copy of the decision below…