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Supreme Court case has lessons for mortgage lenders

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BY ALEXIA CONSTANTARAS Attorney at law, Mongomery & Andrews, P.A.

 

Lenders that resell or buy mortgage loans might feel the impact of a February decision by the New Mexico State Supreme Court that affects their ability to foreclose if the borrower defaults.

The case, Bank of New York v. Joseph A. Romero, involved a Chimayó man who refinanced a mortgage he had taken on a home he inherited from his father decades earlier. Romero secured the original loan to open a business in Española; the 2006 Equity One refinance was done to pay off that older mortgage and other debts.

Romero claimed his business made approximately $5,600 per month, but Equity One didn’t confirm that information or require an appraisal. To satisfy provisions of the state Home Loan Protection Act, or HLPA, Equity One had Romero and his wife sign a document stating that their $30,000 cash payout from the transaction was “a reasonable tangible net benefit” to them. 

The mortgage was later sold to Bank of New York. When the couple defaulted on the loan payments in 2008, Bank of New York filed for foreclosure in state District Court, claiming it was the successor in interest and holder of the Romero’s note and mortgage.

The Romeros countered that the Bank of New York lacked standing to file a foreclosure action against them. 


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