09/10/2024
I once had a husband and wife as clients who purchased a house on an adjustable rate mortgage with mortgage company "A". When the first adjustment period came they received a letter from mortgage company "B" advising of the new monthly payment. These clients did the calculations and answered mortgage company "B" by advising that company "B"'s calculations were mistaken and the new monthly payment should be less than they figured. Mortgage company "B" answered by advising of another new monthly payment slightly lower than the first, but to the clients this was still not low enough. So they responded to Mortgage company "B" with their reckoning as to what the new monthly payment should be and Mortgage company "B" responded by again lowering the payment a little more, indicating that this would be the final lowering.
But, the clients still did not think this was low enough. So they came to me with the documents from the closing and the rate set forth in the copy of the mortgage documents they showed me substantiated their opinion as to what the new payment should be. I then ordered a copy of the recorded instrument and the copy produced from the Recorder's Office bore a line-out on the original interest change rate with a higher interest change rate inserted. Next to the line-out were what appeared to be the initials of the makers (the clients). The only problem was that the clients maintained that they had never been informed of any such post-closing change in the interest rate and that the initials on the mortgage change rate were not theirs. While searching for factual witnesses I discovered the individual who worked for Mortgage company "B" in the document approval department.
She explained that the buyers secured a mortgage from Mortgage company "A". Mortgage company "A" then did what so many other mortgage companies do, they sold the paper to Mortgage company "B". The fact witness who I discovered was the person who was responsible for examining mortgage documents submitted by other mortgage companies seeking to sell the paper to Mortgage company "B". She recalled this transaction because when Mortgage company "A" submitted the mortgage papers to Mortgage company "B" the interest rate was below the guidelines set forth by the applicable mortgage regulatory agency. So she rejected the mortgage and sent it back to Mortgage company "A". A week or so later Mortgage company "A" resubmitted the instrument to Mortgage company "B" who then purchased the note and mortgage. At that time the law stated that when a secondary purchaser purchased a mortgage without knowledge of errors or fraud, that the secondary purchaser was immune from claims by the maker/s that the documents were defective. However, if they accepted the document with knowledge that the documents had been altered, the loan documents could be declared a nullity.
I had visited my law school negotiable instruments Professor who opined that the law would make my clients winners, but that no judge will ever give them a free house.
To make a longer story short, hearing on opposing motions for summary judgment was had and the trial judge ruled against my clients. I appealed the matter to the Appellate Court which reversed and remanded the matter for trial. By this time my clients were experiencing domestic intranquility and wanted to end the case. The other side seemed similarly tired of the litigation and a settlement was reached whereby my clients received a substantial sum and the mortgage was allowed to continue at the proper interest rate. Shortly thereafter the clients sold the house and that was the end of the matter. From what I later learned the Judge who had heard the case at the trial level was having a mortgage problem of his own in Florida.
