House free for improper execution of mortgage?

Factual Questions
1

I’ve heard that in the past some mortgage company failed to credit money to an account properly on a house mortgage. This failure was early in the payment process. The court ruled against the mortgage company and the buyer basically got the house for free. Sorry that the details are so sketchy. (I believe that the company was crediting extra payments against interest and not principal)

Is this an urban legend?

2

Three things to reveal:

  1. I’ve never heard of such a case, but that doesn’t mean it never happened;
  2. Some judges - well, nothing’s impossible;
  3. I dropped out of law school.

That said, most contract disputes are settled so as to avoid “unfair enrichment”; you pay for what you’re getting, you get what you paid for – so it might be a UL. Of course, it’s possible that such behavior was deliberate and fraudulent, in which case a judge might award punitive damages. Such an award, plus the overpayment, might completely cover the cost of the house.

3

And I guarantee that if it happened once there’s now boilerplate language in every mortgage contract preventing it from happening again.