Debtors filed a voluntary petition for relief under Chapter 7. The Debtors own and have title to real property ("Property"). Prior to the Petition Date, the husband borrowed $85,000 from Lender. This loan was reflected by a promissory note signed only by the husband, as "Borrower." The term "Note" is defined in the Mortgage as the promissory note signed by Borrower. On the same date, a mortgage granting Lender a mortgage on the Property was executed. The last paragraph of the Mortgage provides, "By signing below, Borrower accepts and agrees to the terms and covenants contained in this Security Instrument and in any Rider executed by Borrower and recorded with it." The signature block for the Mortgage consists of several lines under which the word "Borrower" is pre-printed. Under one of those lines, the husband's name is pre-printed along with the word Borrower. His signature appears above that line. In addition, the wife's signature appears above one of the lines, underneath which her hand-printed name and the pre-printed word "Borrower" appear. The Definition section of the Mortgage defines "Borrower" as the “husband,” a married man. Borrower is the mortgagor under this Security Instrument." Security Instrument" is defined in the body of the Mortgage to mean "this document, which is dated November 11, 2005 together with all Riders to this document." A Second Home Rider was executed in conjunction with the Note and Mortgage. The Second Home Rider does not contain a definition section, but provides that the Second Home Rider "is incorporated into and shall be deemed to amend and supplement the Mortgage . . . of the same date given by the undersigned (the 'Borrower' whether there are one or more persons undersigned)." On the last page of the Second Home Rider, the husband's signature appears above a line with his name and the word "Borrower" pre-printed underneath. In addition, the wife's signature appears on the last page of the Second Home Rider above a line with her name hand-printed and the word "Borrower" pre-printed underneath.
The bankruptcy trustee commenced an adversary proceeding by filing a complaint against Lender seeking to avoid, pursuant to § 544, the Mortgage as to the wife's interest in the Property because the wife is not named or identified as a mortgagor or borrower in the body of the mortgage. The Bankruptcy Court granted judgment as a matter of law to the Trustee, reasoning that because the wife was not specifically named as a borrower in the body of the Mortgage, the Mortgage, as it pertains to her interest in the Property, would not have priority over a judgment lien holder or a bona fide purchaser under Kentucky law.
On appeal, the Bankruptcy Appeal Panel acknowledged that the wife was not identified in the definition section of the Mortgage as a Borrower, but the Second Home Rider and the Mortgage raise a question as to whether the wife was sufficiently identified, upon consideration of the entire instrument, such that the recorded Mortgage could not be avoided by a hypothetical judicial lien creditor or bona fide purchaser under Kentucky law. However, the Bankruptcy Appeal Panel concluded that the Bankruptcy Court erroneously held that a mortgagor's identity cannot be incorporated from a rider to a mortgage. The Bankruptcy Appeal Panel continued that the Mortgage defines "Security Instrument" to include the terms of the Second Home Rider. Although the wife may not be listed as a "Borrower" in the definition section of the Mortgage, she did sign the Mortgage below the definition of the term Security Instrument. She also signed the Second Home Rider below the language of the Second Home Rider, which provided that its terms were meant to "amend and supplement" the terms of the Mortgage and defined the undersigned, meaning the wife and her husband, as a "Borrower." Therefore, the Bankruptcy Appeal Panel concluded that under Kentucky law, viewing the documents together as a whole, the wife was sufficiently identified as a mortgagor such that the Mortgage is enforceable against her interest in Property. Rogan v. Fifth Third Mortgage Company, AP No. 10-8050, (B.A.P. 6th Cir. June 24, 2011).