When purchasing a piece of real property nearly every buyer will take out a mortgage loan in order to pay for the purchase. Mortgage documents contain details on important aspects of the loans such as amount, interest rates, repayment schedules, any relevant fees and circumstances that can lead to default on the mortgage or mortgage foreclosure. Before taking out a mortgage it is important to understand the key terms outlined in the mortgage documents and what circumstances can lead to changes in the payment schedule or foreclosure.
Mortgage Law Basics
Mortgage law can be a complicated and difficult subject, so for details on a particular mortgage loan or with help understanding mortgage documents, consult a mortgage attorney. In basic terms, a mortgage is the legal instrument that secures a loan used to purchase property. Mortgage documents create both a personal obligation from the borrower to repay the loan to the lender and an interest in the property on behalf of the lender that allows seizure and resale of the property to recover the loan amount. The most common variance across mortgages is whether or not the interest rate is fixed or adjustable. Fixed interest rates stay the same throughout the duration of the mortgage while adjustable can change after a certain number of years. As the interest rate changes, so does the amount the buyer must pay under mortgage law. Failing to understand and comply with the terms of the mortgage documents can result in serious consequences because the lender has both an interest in the property and a personal obligation of repayment from the borrower. Mortgage law requires lenders to clearly represent the terms of the mortgage as outlined in the mortgage documents, but buyers should consult a mortgage attorney with any questions or concerns.
Foreclosure Law Basics
If a borrower has defaulted on their mortgage, the lender may elect to foreclose on the property. Foreclosure process when a lender exercises their interest in the property by seizing it and reselling it to recover the money lent to the borrower. A foreclosure sale is usually a public auction of the property at which the lender sells the property to the highest bidder. The lender’s goal is to sell the property for the amount of the loan still owed, but in the event that does not happen a borrower will be personally liable for the difference between the loan amount and the sale price. Generally a lender must provide adequate notice of sale as outlined in mortgage foreclosure law, and give the borrower a chance to come up with the money to repay the loan prior to conducting the sale. Local mortgage foreclosure laws will provide the rules governing the process, so consult a mortgage attorney with any specific questions. If an owner of property has been foreclosed on, local mortgage foreclosure law will provide a timeline for them to vacate and a list of possible defenses. If facing foreclosure, consult a mortgage attorney immediately to know what steps are available.
Consulting a mortgage attorney
When reviewing mortgage documents with a lender, keep in mind that the lender does not necessarily share your interest. Lenders can resell mortgage loans or foreclose on the property to recover their money, and as such whether or not you are able to repay the loan will not always influence a lender’s decision to approve a mortgage loan. Fair lending laws prevent lenders from lying to you and withholding key information, but keep in mind they will approach the process with different interests in mind. It is important to consult a mortgage attorney before agreeing to a mortgage loan. A mortgage attorney will represent your interest and be familiar with local mortgage law and the mortgage documents presented by the lender.
If facing foreclosure on your home or property, consult a mortgage attorney immediately. A mortgage attorney will know local mortgage foreclosure law, and be able to assist you find a possible defense or provide enough time for you to find a new home. Do not face a foreclosure process without first consulting a mortgage attorney for advice and assistance.