Borrowers who promise they own a property cannot back out of their mortgage just because their original title was defective, a New York court ruled.
The Appellate Division, Second Department delivered the decision on February 18, reinforcing what many in the mortgage industry have long hoped: warranties in mortgage documents actually mean something.
Here’s what happened. John Reinhardt and Patrice Gay-Reinhardt got a deed to a Queens property back in 2013. Two years later, in April 2015, John took out a $625,500 mortgage from Freedom Mortgage Corporation. Both he and his wife signed the mortgage paperwork, which included a pretty standard promise: we own this property, and we have the right to mortgage it…