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Issues with Home Owners signatures on mortgages

We all have heard by now of the issues that banks and other lenders are having with enforcing mortgages due to “robo signing” or “rubber stamping” mortgage documents. Banks have been accused of committing fraud by not having the actual person sign the mortgage that is required to and as a result, foreclosure have been challenged, and in many cases successfully. However, what happens in the reverse situation. What if someone signs their name and then either at the time of the closing or later signs a co-debtors name to the mortgage document. What if your name appeared on a mortgage document, but was never notarized, you can’t be held liable for that debt right? Don’t answer so quickly. Under many state laws, you may be liable, especially if the co-debtor was a husband or wife.

If you take a look at the Massachusetts law relative to acknowledging signatures of homeowners on mortgages and other secured notes, (M.G.L. c. 183, § 29) the statute requires only mortgages to be acknowledged. That means other documents do not need to be notarized. With that said, there are very few registries that will accept other instruments such as a notices or lease, assignment of mortgage or security agreements without a duly executed acknowledgement form a notary. However, it is not to say that the law does not provide for such a document to be recorded.

It is equally clear that a notary only needs to witness and acknowledge one grantor, out of two or more. For example, as early as 1828, a Massachusetts Court decided that the acknowledgment of a deed by one of two grantors was enough to allow its recordation, and to make the instrument binding against both grantors, even though the two grantors each separately owned distinct parcels Shaw v. Poor, 23 Mass. 86 (1827). So what this case tells us is that if you sign your name to a mortgage, and no one witnesses it or notarizes it, and your husband or wife also sign and their signature was notarized, that will be good enough to bind you to the mortgage obligation.

The obvious question, I ask following the analysis of Shaw, is would happen if someone else, such as your spouse sign your name to the mortgage. This requires a discussion of forged documents. A forged signature conveys no title, thus presenting a problem for the title examiner who usually has no way of ascertaining from the record whether or not an instrument a forgery. A valid acknowledgment lessens the danger of a defect for this reason. However, a notary owes no duty towards persons later relying on the notary’s certificate of acknowledgment. See New England Bond & mortgage Co. v. Brock, 270 Mass 107, 169 N.E 803 (1930), in which a second mortgage relied on a notary’s certificate to discharge of a first mortgage that was a forgery. The court held that there was not a cause of action that the law does not impose on persons authorized to take acknowledgments a duty toward every one who later relies on the accuracy of his or her certificate of acknowledgement, since the only use of a certificate of this nature was to entitle it to be recorded. So the bottom line is it will be difficult to prove you do not have a duty on the mortgage unless you can prove with evidence your signature was forged even after the closing.

The foregoing article was drafted by Attorney Michael Goldstein of the Phillips Law Offices, LLC, a consumer debt law firm in Massachusetts, Rhode Island and Maryland

Credit Card Companies really can take away your car

Recently, in a Massachusetts District Court, a credit card company was facing a judge, and asking to take possession of a consumer car because they had defaulted on paying a minor credit card bill, to the tune of $400.  A lot of you may not realize it, but the simple fact of ignoring a credit card bill can have serious consequences, much more so then simply bad credit.  Credit card companies and other unsecured creditors have been fighting back, although in many cases unlawfully, by taking possession of their customers cars and trucks, selling them and applying the funds to the past debt on the credit card bills. The problem with the conduct of the creditors is that in many cases, these companies are sidestepping the court procedure and rules in order to satisfy a debt.

How did this happen to me? That’s the questions people have asked after the fact. Well, consumers do bear some of the responsibility. If and when you find yourself unable to pay your credit cards, you must be vigilant in checking your mail. A creditor may file a law suit and if you don’t answer it in a certain period of time (21 days in Massachusetts), the Creditor will get a default judgment against you. Once that happens you are already way behind.

If a creditor does get a judgment, they can not just come and take your car though. They must obtain a court order. The problem for consumers though is that if you are ignoring the complaint filed, you have not defended yourself against the debt. A debt that quite frankly you may or may not even own to the creditor who filed the law suit. What some sneaky creditors will even do is at the time they ask for the default, will ask for permission to take your car. Since you are not there to say anything in your defense, the judge may just grant the creditor’s request. However, even if this does happen to you, you may still have many consumer rights, and the creditor may have not followed all of the rules in your state.

The biggest defense that consumers have is a shift of burden from them to the creditor.  The credit card company has an absolute obligation to prove that the defendant actually owes them and not some previous creditor the debt. The Creditor must be able to demonstrate they have the original paperwork signed by the card holder. This is called demonstrating they are a holder in due course.  Many of these unscrupulous creditors will buy millions of dollars in debt in a bulk transaction. What this means is that they may not have actually reviewed their file to make sure your specific paperwork was in the batch. If they do not have it, you may be able to go into court and force them to give you your car back and may even be able to set aside the judgment.  This is very similar to the foreclosure defense of “show me the note”, that has become so popular in land courts across the nation.  The Creditor, even if they own the debt, may have waited too long to get a judgment. In each state, there is a statute of limitations on how long a creditor has to obtain a debt, for example in Pennsylvania, the statue of limitations on debt collection is 4 years or even 10 years in Rhode island.  Finally, in each state as well as under various Federal laws such as the Federal Debt Collections Practices Act, there is a requirement to provide proper notice to you by mail, in some cases proof of delivery is required.

The most important thing to do if you find yourself owing a credit card or any other debt is to deal with it before the situation gets out of hand and a suite is filed. However, if a suit is filed, you should seek out the advice of a lawyer in your state who handles consumer debt matters.

Why employ a debt settlement attorney

debt relief attorneyThe ease of accessing credit combined with the rapid decline in the economy has left  many households struggling with their debts. But what happens when the bills spiral  out of control? An unfortunate fact of life is that many individuals find their bills become  unmanageable and when this happens, the services of a debt attorney may be  worthwhile considering.

A debt attorney is responsible for all aspects of managing unsecured debt, including  communication and negotiating with creditors and getting charges frozen on the  account.

A debt attorney is a far more intrusive action that simple credit counselling and  will have an impact on the credit score. However, if an individual has opted to  employ the services of a debt attorney, the chances are that their credit rating has  already undergone a severe beating and addressing the problem will improve the score  in the longer term rather than continuing to ignore it.

A debt attorney will firstly release some of the stress from the debtor by  contacting all of the lenders and arranging for all communication directly to the  debtor to cease. From that point forward, all correspondence will come via the debt attorney. The lenders will also be asked to cease their collection activities and to  ensure no further charges, interest payments or penalties are added to the account  whilst negotiations are ongoing.

A debt attorney is responsible for coming to an agreement with a creditor over how  much of the debt is to be repaid. In many cases, creditors are willing to write off  a large chunk of the debt in return for receiving regular payment at the agreed amount.  It is not unknown for lenders to agree to accept as little as 40% of the  original outstanding balance. Whilst this may sound surprising, any debtor employing  the services of a debt attorney will have gotten into serious financial difficulties and lender recognize that it is better to get some of the money back rather than  risking losing it all by the individual being declared bankrupt.

The debt attorney is responsible for more than just renegotiating the terms of the  debt; they should also check the credit report for the individual to see if there  are any corrections which need to be made. In addition, the creditor and the debt  attorney should discuss and come to an agreement over how the reduced payment will  be marked on the credit file.

After payments cease to be made, it takes seven years before the listing can be  removed from the credit report. However, if the debtor makes contact to start paying  the balance, the seven year period is reset, there by penalising the individuals who make an effort to repay their debts rather than just ignoring them. In recognition  of this, some lenders are willing to simply mark the credit file `paid as agreed  when a debt attorney is involved, rather than list it as a delinquent debt.

The foregoing article was first posted by the Consumer Debt Radio Show