Fighting the Bank Mortgage Foreclosure Action -- Reformation of Mortgages
Recently I had a case where the foreclosing Bank was seeking to reofrm the mortgage before it foreclosed on my client's home. Reformation is an action in equity, and basically seeks the judge's approval to change or reform writing on a contract or agreement in order to convey the actual intent of the parties when the agreement was drawn up.
In the Bank foreclosure cases, sometimes I come across cases where the Bank either neglected to include the legal description of the property being foreclosed, or they simply made a mistake on the legal description itself. In order to make sure the foreclosure is properly finalized, the Bank has a duty to ask that the court add in the legal description or to correct the description that was written in error. This is where the Bank adds one additional count to the forelcosure count of the lawsuit and seeks reofrmation of the mortgage document.
This is important to the Bank because they want to make sure that once foreclosure has occurred, they will be able to properly foreclose on the right property associated with the exact legal description of that property. In order to successfully obtain a judge's approval for reformation, the Bank must allege that the mistake on the legal description in the mortgage was due to mutual mistake of the parties.
In my 15 years of litigating forelcosure cases, I have yet to see a Bank voluntarily allege in its reformation action that when the mortgage was executed, the parties made the error on the legal description by "mutual mistake." Of course, this is often a fallacy, because how often does the borrower even read the mortgage contract, let alone discover that the mortgage includes errors and is mutual in its mistake of the legal description?
My theory is that the Bank's lawyers are hopefull that the defense attorney or the borrower/ defendant overlook this issue and then try to obtain their reformation with relative ease. But not so fast!! In challenging Banks in reformation cases I often file a Motion to Dismiss the case by arguing that the Bank cannot claim reformation until it alleges that the parties both "mutually" made the mistake on the legal description. Often, by making this argument I am able to dismiss the case, and the Bank is forced to Amend its lawsuit or simply go away and try to refile a new suit after it has enough evidence to show that the mistake was mutual. Often the Bank is able to verify that the mistake in the legal description was mutual by alleging that the homeowner took possession of the house, paid for it through a loan arranged by the lender, and consented to making payments on the loan. The take away from this is that until the foreclosing Bank actually alleges that there was mutual mistake of the parties, and can prove that this mistake existed when the loan was arranged, you must always, always, try to dismiss their case and put a damper on their attempts to take your home away from you.
** The above is not intented to give legal advice, and is for informational purposes only.