Originally found at Benny L. Kass
Benny L. Kass is a practicing attorney in Washington, D.C., and Maryland. No legal relationship is created by this column.
DEAR BENNY: My wife and I received from our lender a repayment agreement for our original mortgage. This was a result of the bank initiating a foreclosure sale, which was temporarily suspended because we agreed to enter the Home Affordable Modification Program.
But the bank is asking us “to acknowledge that they are the legal holder and owner of the Note and Security Instrument and further acknowledges that if Lender transfers the Note, as amended by this Agreement, the transferee shall be the ‘Lender’ as defined by the agreement.” It should be noted that this is not the original bank we signed the mortgage with.
We obviously won’t sign this amendment and supplement to the original mortgage until we have an attorney review the documents. What do you think we should do? –Brian
DEAR BRIAN: Your lender is trying to protect itself by having you sign that document. Over the past several years, lenders sold their mortgage loan papers in bulk to such groups as Fannie Mae or Freddie Mac who “securitized” those loans and resold them to investors all over the world.
No one knows the whereabouts of the original promissory note that you initially signed.. And many judges throughout the country have told lenders, “If you cannot show me the original note, I will not let you foreclose on the property.” So, your lender is basically “blackmailing” you. If you want the loan modification, you have to sign the agreement.
You really should get a lawyer to assist you. The lawyer will determine whether judges in your state require the original note. If they do, you may be in stronger bargaining position with your lender.
It should be noted that not all courts have adopted this position. The bottom line: You don’t want your house to be foreclosed upon. Only you can make the decision, but get some legal advice before you sign that agreement.
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