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Kline v. PHH Mortgage Corp.

Court of Appeals of Arkansas, Division IV

October 16, 2019

Vicki KLINE, Appellant
v.
PHH MORTGAGE CORPORATION, Appellee

          Rehearing Denied November 20, 2019

Page 263

          APPEAL FROM THE BENTON COUNTY CIRCUIT COURT [NO. 04CV-15-1301], HONORABLE JOHN R. SCOTT, JUDGE

         Sanford Law Firm, PLLC, by: Josh Sanford, for Appellant.

         Wilson & Associates, P.L.L.C., Little Rock, by: H. Keith Morrison, for Appellee.

         OPINION

         MIKE MURPHY, Judge

Page 264

          And you may find yourself in a beautiful house

          ....

          And you may ask yourself, well

         How did I get here? [1]

          Appellant Vicki Kline owns a house located on Champions Boulevard in Rogers, Arkansas, which is subject to a mortgage. Yet she claims that, unbeknownst to her, her signature was forged on numerous mortgage documents for the property.

         In this litigation, Kline sought a declaration that the mortgage on the property held by appellee PHH Mortgage Corporation (PHH) is void. Kline pursued this relief on the basis of alleged forgeries of her signature on certain mortgage documents and pursuant to Arkansas Code Annotated section 18-12-403 (Repl. 2015) (sometimes referred to as Section 403).

          Kline did not prevail before the circuit court. There, the court declined to grant her relief based on Section 403 and ordered a decree of foreclosure in favor of PHH. Kline appeals to our court. After due consideration, we affirm.

          I. Background

          In April 2000, Kline and her former husband, John Marquez, purchased property located on Champions Boulevard in Rogers, Arkansas, for $65,000. In 2001, they executed a $765,000 mortgage in favor of Arvest Bank to build a house on the property. In the years that followed, several additional loans would be taken out on the property in the names of both Kline and Marquez.

          In 2002, a $345,000 second mortgage in favor of Arvest Bank was executed in the names of Kline and Marquez. In 2003, a mortgage in the amount of $1.2 million was executed in favor of Regions Bank with Kline’s and Marquez’s names appearing on the note. Shortly after the mortgage with Regions Bank was entered into, a release of the Arvest mortgages was recorded. In 2004, a $1.36 million mortgage in favor of Merrill Lynch was executed in the names of Kline and Marquez. A settlement statement reflects that the Merrill Lynch mortgage was used to pay off the Regions mortgage. The Merrill Lynch mortgage was recorded in November 2004. Thereafter, the Regions mortgage was released, which was recorded in December 2004. Subsequently, Merrill Lynch assigned its mortgage to PHH, a subsidiary and loan-servicing arm of Merrill Lynch.

          In June 2010, Kline and Marquez filed for Chapter 7 bankruptcy. Their personal liability on the Merrill Lynch loan was discharged in the Chapter 7 bankruptcy, and the bankruptcy terminated in October 2010. Despite the discharge, Kline and Marquez continued to voluntarily pay ...


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