This case reflects the issue occurred between the property tenants and the North Adams Hoosac Savings Bank. Harry Hull acquired a number of real estate investments from the North Adams Bank in 1985 and 1986. After the marriage to Kathleen, Hull decided to convey his ownership interest to himself and his spouse. Based on two current properties, together they obtained a new property as well. However, after the divorce, Hulls’ all loans were in default. Under the threat of foreclosure, the former spouse brought $ 15,000 payment (Jennings, 2008). According to the divorce agreement, Harry transferred his interests in the East Quincy and the Yale properties to his wife.
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Scope of the Problem
The problem of the case lies in the fact that in an attempt to cover all the mortgagees, Kathleen had to declare bankruptcy and ask the North Adams Bank to separate properties. In reply, the bank rejected her claim arguing that these properties are indistinguishable. As a result, the foreclosure of loans should be made, and Kathleen should be awarded for $ 300, 000 by the trial court. Nevertheless, the judge overturned the decision.
Analyzing the mentioned case, it is necessary to point out why the bank treated all the loans as one. All the properties were at the disposal of both spouses since their marriage and their tenants by entirety status. What is more, all the properties were subjected to the foreclosure as the properties were interconnected, and one default might cause another one. According to the agreement, Kathleen was liable for all the properties as in the case one of the spouses conveys his interest to another, the latter obtains a full responsibility. In this case, it makes no sense that she was not an original party to all the mortgages. The property of tenants by entirety belongs to both spouses and both of them take the complete responsibility (Grogan & Chambers, 2015). In the case Kathleen wants to keep the property, she still owes the money due to the fact that the loan was not paid.
In my point of view, the outcome of the case is incorrect. The spouses used two properties to buy a third one, but the bank claims that the properties and loans are inseparable that indicates that the loan taken against the three properties is a blanket mortgage. A blanket mortgage encumbers all the properties. Additionally, the bank does not owe a fiduciary duty to the wife as it owes a fiduciary duty to its investors. Therefore, it seems that the bank is adhering to the terms of the mortgage. From this and the above-discussed observations, it becomes clear that the decision of the trial court is non-equitable. The situation with the mortgage is complicated by the very fact that the interests of three parties are affected in these legal relationships as opposed to the division of the property that is not encumbered with a mortgage. Therefore, to find a solution that satisfies all the stakeholders, it is necessary to consider each particular situation properly paying a precise attention to all the details. Speaking more of the recommendations, it seems appropriate to mention that the majority of conflicts and disputes related to the mortgage can be avoided by pre-signing a prenuptial agreement between spouses. Another essential legal guarantee that is used to protect the interests of all sides of the mortgage is the mortgage agreement. In particular, the mortgage agreements registered by banks reduce the tenants’ risks to a minimum.
Grogan, D. L., & Chambers, M. C. (2015). California Mortgage Loan Origination and Lending (5th ed.). Brookfield, WI: OnCourse Learning.
Jennings, M. M. (2008). Real Estate Law. Mason, OH: South-Western Cengage.