You’ve got a forged signature in your mortgage documents. You’ve got them dead to rights—there’s no doubt it’s a fake. You’re excited, because you think you might have a free house. So, can you cancel your mortgage? The answer may surprise you.
Who Else Wants a Free House?
A lot of homeowners call us, having identified some form of fraud or robo-signer in their mortgage papers, and they want to wipe out their mortgages and walk away free and clear. A lot of other people find this website with searches that ask similar questions. So we know there are a lot of people out there looking for the lottery ticket, the ultimate windfall: a free house.
How You Could Get a Free House
The surprising answer is that, yes, in certain very rare instances, a forged signature can be a reason to wipe out a mortgage. But those instances are very rare and have very little to do with the kind of fraud most of you are thinking of.
What a Robo-Signer Means for Your Mortgage
The most common kind of fraud most people see in their home loans involves a robo-signer on an assignment of mortgage or perhaps even on an indorsement or allonge—in other words, the forged signature relates to the transfer of the loan, not its creation. Such a forgery cannot legally have any effect: so if the purpose of the signature is to transfer the loan, that transfer might be negated. But if the loan was otherwise valid before the forgery appeared—the borrower actually borrowed money and spent it on a house—then the loan, and the mortgage securing it, remains in place. The only question is who might have the right to enforce the loan.
Failure to Launch: A Forged Signature on the Creation of the Loan
One of two scenarios that might end up canceling the mortgage involves a forged signature on the loan documents themselves, the documents that create the loan. So, for example, a homeowner who can truthfully testify, “I didn’t sign that note”—like this fountain-pen user who knew what color ink she used to sign legal documents—could challenge the validity of the loan itself, nullifying both the loan and the mortgage.
And if the homeowner can establish that there is no valid loan document in existence, then the mortgage dies too. (Note that the loan is the actual debt, and the mortgage is the pledge to the bank that it can sell the house if the loan goes unpaid. The mortgage cannot exist without the underlying debt.)
When a Robo-Signed Assignment Terminates the Mortgage
There is one other set of facts that, from a practical perspective, could effectively wipe out a mortgage. If an assignment or other transfer document is forged, that transfer is void and the recipient cannot enforce the loan unless it obtains a valid assignment or transfer from the prior mortgage holder. This means that either the prior holder must enforce, or must execute a new transfer to the new lender. But what happens when the old lender is gone—bankrupt, or out of business? It may be impossible, in that case, for the old lender to do either: enforce the loan or execute a valid transfer. If there is no one who can enforce or transfer the loan, then effectively there is no one who could take the home in a foreclosure action—and also importantly, one one who could legitimately defend an action to quiet title.
How to Make It Happen: Quiet Title Against the Forged Document
So if you’ve got a forged note, or you’ve got a bogus assignment that leaves the loan in the pocket of a now-vanished lender, what’s your next step? If you want to clear an unenforceable mortgage from your home’s title you need to file a “quiet title” lawsuit, asking the court to declare the mortgage invalid.
I cannot state clearly enough that a quiet title action must have some legitimate basis in fact—you have to have a real claim that the mortgage or the underlying loan are not just transferred by fraud, but somehow rendered unenforceable by fraud or other means. At the same time you seek a quiet title judgment, you might also ask the court—in what’s called a “declaratory judgment” action—to declare the loan unenforceable. Again, you can only do this if you have a legitimate factual basis to do so. Winning a quiet title or declaratory judgment action will give you a judicial declaration that there is no mortgage on your title, or that you no longer have to repay the loan.
Who to Call for a Quiet Title Action
If you think you’ve got a void mortgage or an unenforceable loan, you need lawyers who understand what makes a valid quiet title claim and know how to make it stick in court. Give us a call for your free half-hour consultation—we’ll review your loan documents and let you know if you have a basis to make a claim.