Mortgage Assignment Hanky Panky


On Friday, August 12, 2011, the Alabama Supreme Court released a decision that is more important for the questions it raises than the answers it provides.

The appeal came about after the assignee of a mortgage foreclosed on the mortgage and then sued for the $1MM+ deficiency. The property, and the lawsuit, were in Baldwin County.

The borrower claimed the lawsuit and foreclosure should be thrown out because of defects in the assignment. The borrower apparently focused on the wrong “defects” and lost the appeal.

The important part of the decision focuses on an apparent mass-notarization of blank mortgage assignment forms, which were then completed later when the lender decided who would get to buy the mortgages.  The trial judge commented:

“One problem I got — I don’t know how you’re going to get around and that is that the date of [the mortgage assignment] is five — six months before the execution of the document and I don’t know how you’re going to get around that.
“….
“Let me tell you what it leads me to believe. It leads me to believe the lady at Wachovia sat down and signed a bunch of these and then they took this and attached it as they sold off the different mortgages. They may have sold one to RCH. They may have sold two or three to some other company and put the attachment to it which means she didn’t sign this document. She signed an uncompleted document en masse because they were probably selling them off left and right. And then they dated it as they reached the deal with RCH.”

The Alabama Supreme Court apparently thought that was a very interesting observation, but said, “However, the defendants’ trial counsel did not object to the admissibility of the mortgage assignment on that basis” so it could not be considered in the appeal.

Hmmmmmmm…..

I wonder if that trial judge in Baldwin County was on to something. Do we have our own version of Robo-signing in Alabama?  Read the decision, RCH IV-WB, LLC v. Wolf Bay Partners, LLC.

Tell me what you think!