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After my mortgage refinance was closed I was notified by the title agent that there were documents that were not signed. The documents were not part of my original closing package. The document was a 1-4 family rider (Assignment of rents) and an updated copy of the mortgage paperwork reflecting the addition of this rider and the addition of an "acceleration" remedy. I contacted the lender who directed me to the legal department of the title company since I did not have this on my original mortgage. The property is a 2 family duplex in which I occupy one unit and a tenant occupies the other. The house value is more than the mortgage and my income should have more than satisfied the approval. When I spoke to the legal department at the title agency I was told that this is a legal requirement and only matters if I am late. I realize that this makes a difference only if I do not pay the loan, but I have concerns about the lender having a stake in all the appliances, curtains, rugs. I also had thoughts or changing the property to a one family in the future which requires approval from the lender. I sent back the paperwork yesterday signed via email, but feel uncomfortable about this document and signing without the notary present. The more I look online the more I think the lender has secured a loan for their own purposes without the legal requirement stated or advance notice. Was I required to send this paperwork back? If not can I tell them I do not want it changed?
Optional Information: State/Country relating to question: New Jersey Already Tried: Online Research. Spoke to lendor
Hi - my name is XXXXX XXXXX X'm a Real Estate litigation attorney here to assist you.
I know you understand that I have not seen your mortgage loan papers, so I can only tell you in general terms about how this works. In my practice, I have closed thousands of commercial and residential loans, and ANY loan that has a rental property held as collateral always has an assignment of rents agreement in the loan paperwork. As the mortgage representative told you, this is only actionable if you fall behind on payments. Basically, it would allow the lender to notify the tenant to pay their rent to it instead of you if the loan were to go into default.
Also, it is very likely that there is some provision in the mountain of paperwork that you signed that said the loan required an assignment of rents AND there should be a provision that says you agree to sign any documents after closing if they were overlooked or left out by mistake.
Thus, there's likely nothing you could have done about it even if you wanted to. However, now that you've signed and returned the documents, the only way you could try to stop it is if you're still within the 3 day rescission period for the refinance. However, if you were to cancel the loan, the proceeds would be pulled as well.
Thus, the botXXXXX XXXXXne is that what you signed is very typical and it's likely that the bank could have forced you to sign through a court order OR cancel the loan if you refused.
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