In the bankruptcy case of Kurak, Debra A.; In re (Agin, Trustee, v. South
Point Inc.), a mortgage was ruled invalid by the bankruptcy court because
it was materially altered prior to the filing.
The details of the bankruptcy case:
"The Chapter 7 debtor scheduled an interest in real property that
was subject to a lien for which she had no contractual liability. The
lienholder filed a motion for stay relief. A copy of the mortgage was
attached to the motion. The debtor was not named as a borrower in the
mortgage. The debtor's signature appeared on the last page above the
word "witness" and the word "borrower" crossed out.
The lender subsequently produced a recorded mortgage that showed the debtor
as the borrower. The court found that the mortgage was materially altered
prior to being recorded by adding the debtor's name as borrower on
the first page of the mortgage. The court said it could not tell when
or why the word "borrower" was crossed out on the signature
page and replaced with the word "witness."
As we've mentioned several times, mortgage lienholders are required
to produce documents that adhere to the letter of the law. There have
been several cases where mortgage lienholders have violated the law by
having mortgage documents that were "irregular." The bankruptcy
court has the power to enforce the laws that govern these documents, while
an individual debtor does debtor does not have the leverage. If you have
irregularities on your mortgage documents you must immediately speak to
your bankruptcy attorney about it. Those irregularities or "mistakes"
may be costing you money.
Consumer Bankruptcy News, Volume 18, page 8