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Category: Bankruptcy Law
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Experience:  Attorney in the practice of Bankruptcy Law since 1996
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IL Foreclosure - The loan was discharged in CH7 BK in 2010,

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IL Foreclosure - The loan was discharged in CH7 BK in 2010, lender filed foreclosure in 2012 using the Mortgage security that is recorded. The Mortgage security provided in the "complaint to foreclose mortgage" has fraudelant signatures which are cleary not mine or my ex-wifes.

I feel the lender has no legal right to the home by virtue of an illegal fraud with the "Mortgage Document." Lender has no right to recoup money due to the CH7 BK Discharge.

Please let me know if I'm correct on this and your thoughts.
Submitted: 1 year ago.
Category: Bankruptcy Law
Expert:  JoeLawyer replied 1 year ago.
It is generally the case that a lender has no right to recoup money from a debtor who discharged his or her liability on the mortgage in Chapter 7. But, this is not to say the lender has no right to recoup money at all; the lender can normally sell the real estate through foreclosure and recoup some or all of their money that way, they just can't recover any money from the debtor directly.

If the mortgage documents on which the lender is relying are fraudulent, again this does not necessarily mean the lender cannot recoup their money through foreclosure if the lender was the one who was defrauded. If the lender made the loan in good faith and thought it had legitimate mortgage documents, it is unlikely that a court wouldn't let the lender foreclose the home just because someone gave the lender a fraudulent document. But, if the lender is the entity committing fraud, such as if they forgot to have the borrower sign the mortgage and so they just faked the borrower's signature on the mortgage, then I would think a court would take issue with the lender foreclosing the home and might even subject the lender to criminal proceedings.

Joe

LEGAL NOTICE: I am only licensed to practice law in certain state(s) and I cannot give legal advice to someone who does not reside in a state in which I am licensed, nor shall anything I say in the above answer or elsewhere on this site be deemed legal advice, even to someone who resides in a state in which I am licensed. Funds I receive from JustAnswer.com are gratuities paid to me for taking the time to respond to questions, not for legal advice. This forum is designed to provide general information only, and information herein is not warranted to be correct or applicable in any way since laws may have been misinterpreted herein, since laws change from time to time, and since the impact of those laws on any particular situation varies. The information presented in this site shall not be construed to be formal legal advice nor the formation of an attorney-client relationship. Persons accessing this response are encouraged to seek independent legal counsel in their jurisdiction for guidance regarding their individual circumstances. Do not take any action or inaction based on information presented herein since it is informational and may not be accurate or applicable to you; it merely attempts to give you a basis of knowledge to help you formulate questions to ask a legal or other professional in a face-to-face meeting in your jurisdiction. JoeLawyer is an attorney but does not hold himself out to be a specialist or expert in any area, regardless of assertions made by any third party, and any implication of being an expert or specialist herein is made in error. I hope the information presented above is useful to you. Answer above is (c) JoeLawyer. All rights reserved.
Customer: replied 1 year ago.

This would be a case where the documents were not signed by us and later signed by the bank or their agent. If the Mortgage doc is fraudelant because of the Bank, wouldn't the loan be unsecured at that point? Filing BK released my liability for the money due on the Note?

Expert:  JoeLawyer replied 1 year ago.
The court in which the foreclosure is taking place may deem the bank unsecured if someone shows up in a timely fashion during the foreclosure and disputes the validity of the mortgage by asserting that the mortgage documents are fraudulent, sufficient to convince the court to reduce the lender's status to unsecured.

And, if the note was discharged in bankruptcy, that would leave the bank with nothing to do but lick its wounds.

However, this could cause an issue for the debtor since the debtor would then have to go back to the Bankruptcy Court and advise the court that the home was actually owned free and clear, in which case it may exceed the amount of exemption the state allows, and thus the Bankruptcy Court may be able to sell the home to give the money to creditors.

For example, say a debtor in Illinois filed Chapter 7 and indicated on their bankruptcy petition that they owned a home worth $100,000 and that it was secured by a mortgage on which they owed $90,000. Let's also say the State of Illinois allows a debtor to claim as exempt up to $15,000 in equity in a home (I'm not sure if this is correct since I don't practice law in Illinois, but let's say it is correct for this example). In this case, the Bankruptcy Court would ignore the home since there is only $10,000 in equity and the debtor can protect $15,000. The Bankruptcy Court would not be concerned whether the debtor reaffirmed or surrendered the home, only that there was not enough equity in the home to make it worth selling for creditors.

But, let's say that same debtor later discovers/proves that the mortgage was invalid and thus the debtor owned the home free and clear. Now the debtor has a home worth $100,000 on which there is no mortgage, and the debtor can only exempt $15,000 per state law, thus the Bankruptcy Court would sell the home, pay the debtor his or her $15,000, and give the rest of the funds to the creditors.

If you think this may be going on in your case, you might want to run these issues by your bankruptcy attorney.

Joe

LEGAL NOTICE: I am only licensed to practice law in certain state(s) and I cannot give legal advice to someone who does not reside in a state in which I am licensed, nor shall anything I say in the above answer or elsewhere on this site be deemed legal advice, even to someone who resides in a state in which I am licensed. Funds I receive from JustAnswer.com are gratuities paid to me for taking the time to respond to questions, not for legal advice. This forum is designed to provide general information only, and information herein is not warranted to be correct or applicable in any way since laws may have been misinterpreted herein, since laws change from time to time, and since the impact of those laws on any particular situation varies. The information presented in this site shall not be construed to be formal legal advice nor the formation of an attorney-client relationship. Persons accessing this response are encouraged to seek independent legal counsel in their jurisdiction for guidance regarding their individual circumstances. Do not take any action or inaction based on information presented herein since it is informational and may not be accurate or applicable to you; it merely attempts to give you a basis of knowledge to help you formulate questions to ask a legal or other professional in a face-to-face meeting in your jurisdiction. JoeLawyer is an attorney but does not hold himself out to be a specialist or expert in any area, regardless of assertions made by any third party, and any implication of being an expert or specialist herein is made in error. I hope the information presented above is useful to you. Answer above is (c) JoeLawyer. All rights reserved.
Customer: replied 1 year ago.
My thought was to dispute validity of the document on my answer to complaint. I have my divorce docs to show signatures which clearly don't match the banks documents. My ex knows she didn't sign anything and raised this question during our divorce proceedings about the home.

I understand on the other issues pertaining to the BK.

Should I file a motion to strike the motion to foreclose mortgage and ask for the necessary relief on the matter?
Expert:  JoeLawyer replied 1 year ago.
Unfortunately we cannot give legal advice on this website, only provide information, and telling someone what they should do in a lawsuit may constitute advice. If you want more details about this, go here: http://joelawyer.webs.com

But, typically, if a defendant in a foreclosure action wants to contest the authenticity of the mortgage documents (or any other material element of a foreclosure), that has to be done during the "pleading" phase of the lawsuit, usually in the Answer to the Complaint. In other words, the normal procedure is for a plaintiff bank to file a Complaint to foreclose property. Then, the defendant homeowner is given 20 days (or so) to respond to the Complaint by filing an Answer or other responsive pleading (see rules of pleading in the Illinois Rules of Civil Procedure, HERE). In that Answer, the defendant normally indicates why they think the plaintiff should not succeed in their lawsuit. Then, a trial is set to determine whether the plaintiff or defendant is correct.

If however the defendant does not timely file an Answer, then the plaintiff will normally ask for a default judgment, which in essence is asking the court to automatically grant judgment in favor of the plaintiff since the defendant failed to timely respond to the lawsuit. Once the default judgment is granted, it may be very difficult for the defendant to then try to dispute the allegations in the Complaint since the defendant missed their deadline to do so. Sometimes courts will allow a defendant to overturn a default judgment if the request to overturn the default judgment is filed timely and satisfies the court that a substantial injustice will be done if the default judgment is not overturned. You can read about default judgments in the Illinois Rules of Civil Procedure, HERE.

I strongly suggest you speak to an attorney in your jurisdiction who can advise you what motions and pleadings are appropriate. And, if in doubt, one normally needs to tell the court, in writing, everything he or she knows as soon as possible since once a deadline is missed, it often cannot be fixed later. Courts do not normally split hairs about the form or title of a document, so if one files a "Motion to Strike" or "Objection to Motion" or "Motion to Reconsider," it doesn't really matter as long as the meat of the request is understood by the court. But, missing deadlines can render even valid objections moot, so time is of the essence.

Joe

LEGAL NOTICE: I am only licensed to practice law in certain state(s) and I cannot give legal advice to someone who does not reside in a state in which I am licensed, nor shall anything I say in the above answer or elsewhere on this site be deemed legal advice, even to someone who resides in a state in which I am licensed. Funds I receive from JustAnswer.com are gratuities paid to me for taking the time to respond to questions, not for legal advice. This forum is designed to provide general information only, and information herein is not warranted to be correct or applicable in any way since laws may have been misinterpreted herein, since laws change from time to time, and since the impact of those laws on any particular situation varies. The information presented in this site shall not be construed to be formal legal advice nor the formation of an attorney-client relationship. Persons accessing this response are encouraged to seek independent legal counsel in their jurisdiction for guidance regarding their individual circumstances. Do not take any action or inaction based on information presented herein since it is informational and may not be accurate or applicable to you; it merely attempts to give you a basis of knowledge to help you formulate questions to ask a legal or other professional in a face-to-face meeting in your jurisdiction. JoeLawyer is an attorney but does not hold himself out to be a specialist or expert in any area, regardless of assertions made by any third party, and any implication of being an expert or specialist herein is made in error. I hope the information presented above is useful to you. Answer above is (c) JoeLawyer. All rights reserved.
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Experience: Attorney in the practice of Bankruptcy Law since 1996
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