Woman’s mortgage voided in bankruptcy litigation due to technicality

Charlotte Bankruptcy Lawyer Bryan W. Stone of Arnold & Smith, PLLC answers the question “Can I keep my house if I file bankruptcy?”


Declaring bankruptcy led to an unexpected windfall for a Massachusetts woman whose mortgage was voided by a bankruptcy court due to a technical error in her mortgage documents.

Woman at work Charlotte Bankruptcy Lawyer North Carolina Debt AttorneyIn 2005, Safina Mbazira purchased a home for $660,000. Like most homeowners, Mbazira financed her purchase, securing two loans from Fremont Investment & Loan.

The day after Mbazira signed the loan documents, a deed was recorded in the Middlesex South Registry District of the Land Court conveying to Mbazira the property on which her home was built. The mortgages were recorded the same day.

Three years after giving Mbazira the loans, Fremont assigned its interest in the first mortgage to a securitized trust called “J.P. Morgan Mortgage Acquisition Corp. 2005-FRE1 Asset Backed Pass-Through Certificates, Series 2005-FRE1.” An assignment was filed in the land registry noting the transfer in interest of the first mortgage.

In 2013, U.S. Bank moved to foreclose on Mbazira’s property. Mbazira declared bankruptcy and, in the context of her bankruptcy, she sued U.S. Bank alleging that the first mortgage was invalid on its face because the acknowledgement failed to include her name as “mortgagor”—or as the person granting an interest in the property to the lender in exchange for the loan.

The technical details of a mortgage—like other instruments involving title to real property—are important because the purpose of recording documents relating to title to real property is to place the public on notice of all those who claim an interest in a specific parcel of property.

If a person came along, for instance, who wanted to buy Mbariza’s property and conducted a title search, that buyer would find that Mbazira was the owner of the property. If the potential buyer searched for any recorded mortgages or liens using Mbazira’s last name, however, the first mortgage would not appear because of the failure to list her as the mortgagor on the mortgage instrument.

If the buyer followed through and purchased the property from Mbazira, the buyer would take title free and clear of the first mortgage. Under Massachusetts state law, a borrower in Mbazira’s position is entitled to “stand in the shoes” of a potential purchaser, meaning in effect that Mbazira could void her first mortgage.

That does not necessarily end Mbazira’s financial troubles. Presumably, she signed a promissory note when she secured the first mortgage loan, so she is still personally liable for the debt. Voiding the mortgage, however, likely resulted in her becoming the owner of a property valued at $576,400, subject to the amount of the second mortgage loan.

The Mbazira case underscores how defects in loan documents can filter to the surface in bankruptcy litigation. The technicalities that voided Mbazira’s first mortgage might never have been spotted had she not declared bankruptcy.

If you find yourself needing the services of an experienced Charlotte, North Carolina bankruptcy attorney, please call the skilled lawyers at Arnold & Smith, PLLC find additional resources here. As professionals who are experienced at handling all kinds of bankruptcy matters, our attorneys will provide you with the best advice for your particular situation.



About the Author

Bryan 1Bryan Stone is a Partner with Arnold & Smith, PLLC, where he focuses his practice on all aspects of bankruptcy, including: Chapter 7, Chapter 11, Chapter 13, home loan modifications and landlord-tenant issues.

A native of Macon, Georgia, Mr. Stone attended the University of Georgia, where he earned a BBA in Banking and Finance, and Wake Forest University School of Law, where he obtained his law degree.

Following law school, Mr. Stone relocated to Charlotte, where he currently serves as Chair of “Bravo!” – a young professionals organization associated with Opera Carolina – and founded the University of Georgia Alumni Association of Charlotte.

In his spare time, Mr. Stone enjoys perfecting his barbeque skills for the annual “Q-City BBQ Championship” and playing softball in the Mecklenburg County Bar softball league.







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