Martin County District Court File No. C201515
Considered and decided by Willis, Presiding Judge, Hudson, Judge, and
A mortgage given as security for a loan, the proceeds of which are used to satisfy a prior loan secured by a purchase-money mortgage, is not itself a purchase-money mortgage for purposes of Minn. Stat. §á507.02 (2002) and is not, therefore, exempt from the spousal-signature requirement.
The opinion of the court was delivered by: Willis, Judge
In a mortgage-foreclosure action, appellant challenges the district court's grant of summary judgment to respondent, arguing that the district court erred by concluding that the mortgage held by appellant was not a purchase-money mortgage and therefore not exempt from the spousal-signature requirement of Minn. Stat. §á507.02 (2002). Because we conclude that the district court did not err, we affirm.
This dispute arises out of an attempt by appellant Wells Fargo Home Mortgage, Inc. to foreclose its mortgage on property that is the homestead of respondent Tamara M. Chojnacki ("respondent"). The facts are largely undisputed.
In December 1995, respondent's then-husband, Edward R. Chojnacki ("Chojnacki"), purchased the property in question under a contract for deed. He satisfied the terms of the contract in December 1996 and received a warranty deed. In 1997, Chojnacki and respondent executed two mortgages on the homestead. Fire destroyed the house on the land in April 1998, and Chojnacki and respondent used the insurance proceeds to satisfy the two mortgages.
In October 1998, Chojnacki and respondent borrowed more than $85,000 from Greentree Financial for the purchase and installation of a mobile home on the land. They secured the loan with a mortgage on the land and a security interest in the mobile home.
In June 1999, Chojnacki borrowed $92,850 from Wells Fargo and secured the loan with a mortgage on the homestead. Although the mortgage document refers to Chojnacki as "a married person," respondent did not sign it. With $84,934.04 of the proceeds from the Wells Fargo loan, Chojnacki satisfied the balance of the loan secured by the Greentree mortgage.
Chojnacki and respondent dissolved their marriage in February 2002. The district court found that Chojnacki had "clearly committed waste on the real property of the marital estate" and "[f]or this reason and Wife's poor financial condition," the court determined that a disproportionate division of real property was warranted. The court awarded respondent the homestead "free and clear of any claim" by Chojnacki but subject to all "judgments, mortgages, and other encumbrances."
Chojnacki had defaulted on the Wells Fargo loan in early 2001, and Wells Fargo began foreclosure proceedings against him and respondent in July 2001. Wells Fargo's initial petition for a declaratory judgment and foreclosure stated that its mortgage was a "refinance of an existing mortgage rather than a purchase money mortgage," and Wells Fargo sought an order declaring the mortgage valid "despite the failure to comply with Minn. Stat. §á507.02." In an amended petition, Wells Fargo contended that its mortgage ...