- Case Type:
- Case Status:
- 21-8022; 22b0005n.06 (6th Circuit, Oct 12,2022) Not Published
- An unambiguous loan modification agreement, signed by the husband and wife that jointly own the real estate, may modify a mortgage signed by the husband as owner of the real estate and the wife solely to release dower. Once the loan modification agreement is properly executed by the husband and wife, the mortgage is amended to encumber all of the right, title and interest of both husband and wife in the real estate.
- Procedural context:
- In 2002, husband signed a note and mortgage when he financed his residence. His wife signed the mortgage (not the note) solely to release her dower interest. At that time she was a one-half interest owner of the real estate. By signing the mortgage to release dower she did not encumber her one-half interest in the real estate. The mortgage was assigned several times. In 2014, husband and wife executed a loam modification agreement (LMA). The LMA indicated it was from any "non-borrower co-owner" and that is "amends and supplements ... the mortgage". There was no limiting language in the LMA regarding dower as there was in the mortgage. In 2020, the husband and wife filed a chapter 13 bankruptcy. Their confirmed plan provided they would file an adversary proceeding to avoid the mortgage. They filed the adversary proceeding against the mortgagee. On cross motions for summary judgment, the bankruptcy court granted summary judgment in favor of the mortgagee. The court held that the language in the LMA was unambiguous, the debtors sought a declaratory judgment not to avoid the mortgage, the poorly worded assignments did not matter, and any possible consumer violations by the mortgagee did not affect the decision. The BAP affirmed.
- The language of the LMA was clear and not ambiguous. There was no ability of the debtors to introduce extrinsic evidence. The assignments of mortgage were not between the debtors and mortgagee. They were between various holders of the mortgage. The bankruptcy court did not find the wife was a borrower- just that she mortgaged her one-half interest through the LMA. As such, the debtors' argument that the mortgagee may have violated several consumer protection statutes was irrelevant as the bankruptcy court did not hold she was a borrower. The debtors had sought to have the bankruptcy court alter or amend the judgment. That motion was denied. The debtors offered no new evidence. Lastly, the decision by the bankruptcy court would not lead to an absurd result. The only relevant documents were the mortgage and LMA. The bankruptcy court agreed that the mortgage did not encumber her one-half interest in the property, but the LMA did encumber that interest.
- Bauknight, Croom and Stout (opinion author)
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Summarizing by Bradley Pearce
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Summarizing by Amir Shachmurove
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