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Dismissed foreclosure involving merged lender reinstated

September 19, 2013

A mortgage foreclosure dismissed by a Lake Superior judge was reinstated Thursday by a panel of the Indiana Court of Appeals.

The panel reversed and remanded Judge Calvin D. Hawkins’ dismissal of a lender’s claim of damages against a widow who 20 years ago took out a $60,000 note with her husband on a Crown Point home the couple bought in 1972.

Sharon L. Hatton’s husband died in 2008, and she stopped making payments on the note in 2009, according to the record. The lender brought suit, Beneficial Financial 1 Inc., Successor in Interest to Beneficial Mortgage Co. of Indiana v. Sharon Hatton, a/k/a Sharon J. Hatton, First Select, Inc., Calvary SPV, II, LLC, and Discover Bank, 45A03-1212-MF-531.

Hatton moved to dismiss the claim on two grounds: that an erroneous legal description invalidated the note, and that Beneficial Financial 1 failed to prove it had an interest in the property as the successor company to Beneficial Mortgage Co. of Indiana. Hawkins granted the motion, but the appeals panel said relief under T.R. 12(B)(6) was error.

 “Moreover, Beneficial’s proof of status as surviving entity in its merger with Beneficial Mortgage Company of Indiana was sufficient to establish its standing to pursue an action to foreclose the security interest set out in the mortgage. This cause is remanded with instructions to reinstate Beneficial’s complaint for damages.”

Beneficial also must have an opportunity to prove that a mutual mistake was the cause of the erroneous legal description of the property secured by the mortgage, the panel ruled.

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