Relief After Judgment Might Void the Sale

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Article by Hudson Cook


In the maelstrom of musical chairs characterizing most foreclosures, there has been a phenomenon that is not discussed very much. The Judgment of foreclosure has been entered but the parties agree to reinstatement (or possibly even modification) before the sale. Most courts seem to be saying that the foreclosure sale under those circumstances is void, although the Mississippi court described in the above referenced article did state that the purchaser at auction did have standing to challenge the reinstatement or more specifically to ratify his or her purchase of the property.

The ruling seems to make sense from the standpoint of the main parties to the litigation but it does pose problems for those who thought they purchased the property and went to some time and expense to make the purchase. On balance the courts seem to lean heavily in the direction of home retention under these circumstances.

This is just one of a myriad of examples where a pro se litigant might miss an opportunity for home retention. It is quite common for homeowners to receive such offers after judgment and before sale. And it is also getting increasingly common where some settlement is reached for reinstatement and modification. But the question remains as to whether the new arrangement is binding or valid if the offer is from a servicer for a trust that does not own the debt, note or mortgage.

This is to be distinguished from situations where the homeowner attacks the judgment or the wrongful foreclosure based upon fraud like a void assignment or some other element. Courts are much less inclined to vacate their own judgment based upon such allegations, although we have seen instances where they have done so.

12 Responses

  1. Can you rescind on a loan from 2006

  2. Thank you so much for that. I have tried most of the lawyers in my area and they haven’t a clue. My own bankruptcy lawyer told me he couldn’t really do much real estate is not his expertise. Plus his thinking is that someone owes them money. So he doesn’t understanding what I’m telling him. I truly appreciate any information. In order for me to stop any and all of there sneaky dealings I had to file for chapter 13. I don’t know if most loan companies documents are the same and this isn’t any coincidence but I couldn’t figure out how they obtain a signature that could possibly look like mine until I remembered the previous loan company whom also shared an address at the same place as them. When I compared the loan papers they were identical in every sense, word for word printing errors and all. The previous loan had my signature and initials on it. They copied the loan papers from our previous loan. I first I thought the prior company had given us two copies of until I realized the only difference was the loan numbers.

  3. @ Cathy ,

    IANAL but djabelanger is correct ,, your case is cut and dried… I take it you are separated or divorced since you were living in another location and were unaware,, can you get his cooperation on this? … I would do whatever it takes (sell a car or jewelry, get a personal loan, liquidate part of a 401K ,, anything) to get a lawyer ASAP.

    I would file a rescission IMMEDIATELY with the “servicer” so 20 days passes before April 18th ,keep it short and simple , DO NOT GET INTO THE “WHY’S” just state “I Cathy Doe hereby rescind loan # 1234567890 with Carrington Mortgage under the TILA act” and mail it USPS Certified/return receipt… copy the BK trustee on the TILA rescission and include a letter stating what you did here about the fraud.

  4. “But the question remains as to whether the new arrangement is binding or valid if the offer is from a servicer for a trust that does not own the debt, note or mortgage.”
    You Mr. Garfield are a mindreader… That was (and is) exactly how I am going to break the agreement with my servicer… the mod and my agreement is a nullity as the servicer/trust/etc. is not PETE therefore my agreement not to sue or file a rescission is unenforceable.

  5. I do not have a lawyer, I would be objecting to their claim on my own. I’ve been trying to research how to go about it. The bankruptcy trustee sent a letter stating I have till the 18th of April to object. Thank you for answering that for me.

  6. Cathy, the note and mortgage is void. on fraud. i hope you have a lawyer, the court bk needs to be informed of this asap.

  7. I have a question if anyone can answer. My husband has a loan with home123 corp out of business now. During his loan signing a notary came to him to sign the loan papers at that time I wasn’t living there so I knew nothing about the loan. Just recently we filed chapter 13 and included the home when Carrington mortgage submitted their proof of claim I received a copy of it also. My signature was forged on the deed of trust and the note also stamped and notarized by a notary swearing I signed in front of her. I went to the court house to see about getting a copy from the notaries journal but she didn’t renewed and never turned in her journal. Thank god for people who slip up because my husband received a fax from the title company on the 25th of September stating that they needed me to sign those documents. The loan signing was on 20th of September.

  8. Its rescission that changes everything
    The contract is void
    Everything is re set to before the contractcwas signed
    The point is it started before the signature

  9. One Last Thing, as of January 2016 according to my credit report I am pre-approved for a HELOC for $126,000 on my property.

    OHHHH….So Tempting !!!! NOT !!!!!!!!!!

    KC has existed, you will no longer find her “Standing on the Sidelines” watching the To Big for their Britches go down in flames.

    Game Over, I hope to see you all on the reBound!
    Many Blessings to All

  10. I thought reinstating with the dead a hoot!
    Of course we were not notified …..We had assumed the case and LP had been dismissed until I decided I was no longer doing business with the BOA Buzzards and went to payoff my husband of 35 years loan.

  11. Here’s a Good One!
    CW files reinstatement with court 2 years after a Non default ..still collecting payments .
    And 2 years after their demise!
    Any hoot. … 4 years after the falsely reported default…MERS baby files the now known infamous. ” All in One”s. Transferring the note & mortgage for $10.00 from lender named on note to CW Bank to CW servicing to BAC to BOA NA. Right after they released the CW LP.

    And I thought getting title insurance 3 years earlier was tough….
    Discover & PROVE UP the money trail with that chain of title

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