In July of 2009 Debtors granted Citimortgage a first mortgage against their real estate. The promissory note was executed for approximately $225,600.00. Citimortgage properly recorded the mortgage and there was no allegation that the mortgage was defective or invalid. Citimortgage assigned the mortgage to Bayview Loan Servicing.
The Chapter 7 trustee sought to undo the mortgage by claiming that the notary seal’s signature was invalid, but the court found the notary seal’s signature to be valid. In ruling against the trustee in this case, the Court relied upon the decision in Kaplia v. Atlantic Mortgage & Investment Corp (In re Halabi), 184 F. 3d 1335, 1337 (11th Cir. 1999). In that case the Court rejected the trustee’s argument that the mortgage could be avoided because of a defective assignment.
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In sum, because the mortgage was effective against a bona fide purchaser of the property, it could not be avoided. If you have questions about Chapter 7 bankruptcy or Chapter 7 bankruptcy in Massachusetts, please visit our state pages.