The latest installment of my hairbrainery came to me last night. With all of these banks unable to produce documentation that they actually own the right to foreclose on properties, what is to stop a homeowner from bringing an action for Slander of Title:
Then, the bank will be forced to produce the documentation or else they will lose the lien on the property, no? And a person could file that in good faith if they made repeated requests to the bank, but the bank didn’t respond, right?
The argument could be that a person really doesn’t believe that the bank has a right to enforce the lien, as it is recorded. Somebody does, but the document in the court house states that the bank “or its assigns” have that right. If they can’t identify their “assigns” or nobody comes forward, the lien goes away (along with monetary damages)
So, can one of you legal eagles shoot down this theory like you have all of my other ones?
Well, in my state, you would still owe the money, it would just be unsecured. You’d have to pay it back, or they could file a collection suit for the balance owed.
Now, what you could do, is have the lien declared invalid, and then file bankruptcy on the debt. Then your house would be free and clear, and the note would be discharged.
I understand that. Let’s assume, arguendo, that a person is so upside down on their home that they have already declared bankruptcy and discharged their personal obligation. I am wondering if my strategy would work.
This wouldn’t work. In the prior bankruptcy, in order to keep the house, they would have had to sign a reaffirmation agreement. It is basically a document filed with the Court that states that you intend to keep the house, and keep the obligation to pay the mortgage. The debt would not be discharged at that time, and it would be another eight years before you could go into a Chapter 7 bankruptcy and ditch the debt.
If you didn’t sign the reaffirmation, the bank would have started foreclosure proceedings at that time. And, it would depend on circumstances, but signing the reaffirmation may imply an arguable acceptance of the lien, no matter the documents.
The best way to do it would be to identify a suspect mortgage, file the bankruptcy, and then bring an action within the bankruptcy to avoid the lien. Our firm has done this on one occasion with a mortgage where the notary was bad. The bank fought and fought, but we won, and the client kept her house ans dumped the mortgage forever. It was about $30,000 in legal fees to dump a $150,000 mortgage.
Again, hypothetically, in the bankruptcy, the homeowner checked the box to show an intent to reaffirm the mortgage, but the bank never responded, and the mortgage was never reaffirmed.
Did your client, hypothetically, sue for slander of title?
