What is a banks liability if the papers on a mortgage were forged?

UPDATED: Sep 30, 2022

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What is a banks liability if the papers on a mortgage were forged?

My mother took out a reverse mortgage about 10 years ago and she past away 2
years ago. I thought the house was in my name. I asked my sister how she took out
a mortgage with out me signing the papers, she told me that my name was on the
deed as the beneficiary. I found out just today that my name is on the deed and the
bank mortgaged the house on a forged signature. And now the bank has the house.
What are my rights at this point?

Asked on January 1, 2017 under Real Estate Law, Utah


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

If you can prove the forgery, you could potentially void or undo the mortgage, because the mortgage  could not have been granted without your consent, if you were as you indicate, on the deed; if you can do this, the bank would not be liable for anything else (any other compensation), since the bank is not liable for another person's forgery: your recourse would be to undo the transaction. You can also sue the person who forged your name, though if that was your mother, you could only sue her estate if the period to assert claims against it is still open. 
However, at 10 years since the mortgage, you are well past your state's statute of limitations for fraud, theft, and breach of contract, which are the potential legal grounds for action in this case. That could prevent you from taking action even if you have a good case. Your state, however, follows what's called the "discovery rule," which means that the statutory period is extended if you did not and reasonably could not have known of the illegal action at first; it is extended until when you did or reasonably would be expected to have learned of that. That could extend the time you have to take action, *but* if you learned of the reverse mortgage 10 years ago, as your question seems to imply, then it is too late: once you heard about the mortgage, the law would expect you *then* to look into any illegality--that's when you should have discovered it. 
So there are several different issues present; you are strongly advised to immediately consult with an attorney, before any more time goes by.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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