Can Owner File Chapter 13 if Did Not Sign the Note or Mortgage?

Consider a homeowner who is behind on the mortgage payments but never signed the note or mortgage. It is likely the lender will not even speak with the owner to try and modify, because the homeowner was not the original party to the mortgage.

This could happen if the owner acquired the property by inheritance. More difficult might be a case where the owner transfers title by deed without paying off the existing mortgage and in violation of the due on sale clause in the mortgage.

Judge Glenn recently entered an opinion denying a creditor’s motion for relief from stay and permitting the debtor to treat the secured claim in a chapter 13 plan. In re Lozada, 444 BR 604(M.D. FL March 31, 2011) The debtor claimed ownership interest because of a quit claim and alternatively claimed she was the rightful heir of her mother’s estate. The court relied on In re Ramos, 357 BR 669(Bankr. S.D. FL 2006).

Two Florida bankruptcy judges have upheld a debtor’s right to cure a mortgage in a chapter 13 even though they were not the original owner. This is also consistent with long-running practice. As a Broward bankruptcy attorney filing bankruptcies in the Ft. Lauderdale area, I can say that these cases are good news for current homeowners to help them save their property.

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