We have been noticing a growing trend, particularly among Chapter 7 trustees, to file adversary proceedings for the purpose of divesting mortgagees of their secured status in instances where the mortgage is improperly attested. Georgia trustees, both Chapter 7 and Chapter 13, have now taken up the cause.
The attached case is the second major case to come through the Northern District of Georgia recently. The earlier case, Gordon v. Terrace Mortgage Co. (In re Kim), 571 F.3d. 1342 (11th Cir. 2009), was decided in favor of the trustee at the bankruptcy court level and the district court level. Only at the 11th Circuit was the mortgagee’s secured status saved because of dragnet language contained in the Waiver of Borrower’s Rights. The attached case, Codington, reaches a different result.
To the extent that you conduct a review of the loan documents prior to a foreclosure or bankruptcy referral, you may want to add a review of the attestation of your mortgage to your check list. In any event, you may want to remind your foreclosure counsel to contact you or the appropriate title insurance company prior to proceeding with the foreclosure of an improperly attested mortgage.
S. Andrew Shuping, Jr.
770-991-0000 x 128
