Last year a California homeowner who was in foreclosure won a quiet title action to recover her home. What is unusual about this case was that she succeeded because the two banks, JP Morgan Chase and Deutsche Bank, which had mortgage interests in the property, failed to respond to the lawsuit. When a defendant, which is the term for those being sued, fails to respond to a lawsuit within the required time, the court can issue a default judgment saying the plaintiff, the California woman in this case, gets a judgment in her favor by default. The result is she retains, or regains in this instance, title to the property and the banks can no longer acquire it or claim title to it.
The surprising part of this case is not that default judgments never happen. They often do, not just in California, but also New Mexico. No, what is peculiar here is that two banks of such magnitude responded several months after the deadline for doing so. Usually these types of institutions have internal systems for responding to lawsuits, particularly involving their real estate holdings, and they have retained counsel who handle these matters as they arise. But the excuses given by the banks in this case for their tardiness in filing a response were not persuasive.
As a result, the homeowner was able to keep her house; furthermore, the prior foreclosure action against it can’t be renewed. She is still legally responsible for the amount she owes on her mortgage, but she has the option of filing a Chapter 7 bankruptcy to eliminate almost all of that debt. Neither JP Morgan Chase nor Deutsche Bank now have a security interest in the real estate so they are unsecured creditors, a category of creditor that has a much less favorable position in a bankruptcy case than one that is secured.
New Mexico law provides for quiet title actions as well. Default judgments are rare, however. If you believe a financial institution has improperly sought to foreclose on your home, contact the Law Office of George “Dave” Giddens at 505-633-6298 and consult with one of the attorneys or visit the website at www.giddenslaw.com. Our attorneys possess the necessary experience to handle quiet title actions and many other types of matters involving buying, selling and protecting real estate in Albuquerque, Santa Fe, Taos, Raton, Farmington, Gallup, Grants, Roswell, Los Lunas, Placitas, Belen and the rest of New Mexico.