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Iowa couple may get free $320,000 home because of 1880's law loophole

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RamboLiberal Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-25-11 09:49 PM
Original message
Iowa couple may get free $320,000 home because of 1880's law loophole
Edited on Mon Apr-25-11 09:51 PM by RamboLiberal
The Iowa Attorney General's office is reviewing the case of a couple who paid virtually nothing for their home because of a century-old Iowa law.

The $320,000 mortgage of Matthew and Jamie Danielson was voided on their home in a suburb of Des Moines because of the "Spousal Homestead" statute, as first reported by the Des Moines Register. That statute, which dates back to the 1880s, requires that both spouses sign a mortgage agreement.

Only Matthew Danielson signed the mortgage in May 2007 in what he described as a "rushed" meeting with his mortgage broker, Jason Larson, in the food court of a shopping mall, according to the Iowa Appeals Court decision in May 2009 that voided their mortgage.

Geoff Greenwood, communications director for the Attorney General's office, said the Danielsons' case is "currently being reviewed" and is not a full-fledged investigation. He said the office first began reviewing the case late last month.

http://abcnews.go.com/Business/iowa-attorney-general-re...

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CoffeeCat Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-25-11 11:34 PM
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1. That couple lives up the street from us...
This was quite the scandal.

They won the case. He signed the mortgage and informed the real-estate agent that he was married. It was common
knowledge. They both shopped for houses as a couple. She never signed.

So technically, due to this old law--they had their mortgage canceled. I think they made one payment.

There is added controversy because she is a mortgage broker. She knew about this law. Furthermore, she has
a relative who also got a free mortgage this way--and she was the broker on that deal. This information was
not understood before the court gave them the house free and clear.

I'm sure that's why the attorney general is reviewing the case. Not sure what they can do. The case is settled,
and the law is the law. I guess the question remains--did this couple intentionally and with forethought only have
the husband sign the mortgage, in order to obtain a free house?

Will be interesting to see all of this play out.
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unblock Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Apr-25-11 11:37 PM
Response to Original message
2. i'm no expert in 1880's iowa law, but if the mortgage wasn't valid
then how does one characterize the proceeds of the voided mortgage.

the money went from the bank to the homeowners in exchange for nothing. legally, that would be what...?

a gift?
a theft?
a con?

my vote is for **FRAUD**. per the article, the loan application listed matthew as "unmarried", so legally, the bank could easily argue that it was deceived into thinking there was no second signature to be required.

generally speaking, if a contract is declared null and void, you don't just say whoever's ahead wins and whoever's behind loses, ha, ha. you try to go back to square one and fix it so that it's as if the contract never happened. the bank did not gift the money, so it's still theirs. i.e., the homeowners have to repay it.

the MORTGAGE isn't valid, but the MONEY is still the bank's.
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