Recording Loan Modification Agreements

In most cases, a recorded change is not required. However, in certain circumstances, a registered change may be necessary to ensure that the lender is protected. When a change is recorded, it is customary to prepare two separate documents, one containing the essential conditions that are not registered and the other registered, which records the required conditions. The most common cases are those in which a credit change requires registration: lenders considering a loan modification contract should be re-extended to the title of the property in question to determine if there are other pledges. The Maynard case suggests that even if the title review shows junior pledges, the mortgage priority is not compromised if the amendment agreement simply reduces the amount of the payment or extends the duration. The court`s decision followed the fourth court of appeals of Ohio`s Community Action Commt. of Pike Ct., Inc. Maynard2, which was based on similar facts: the amendment granted an extension of the repayment period and reduced monthly payments, but did not provide additional credits or increase the interest rate. The Maynard court was based on an Ohio Supreme Court case, Riegel v. Delt,3, which considered that the amendment should constitute an effective payment of the debt or an explicit release in order to change the form or date of payment for the payment of the mortgage. As a result, the mortgage has maintained its priority. A second type of credit change occurs when the loan is ready to pay and the lender agrees to capitalize the outstanding payments by adding the amount of debt to the principal of the loan and thus making the loan up to date.

The loan repayment period may be extended, depending on whether the monthly payment amount is increased, reduced or remains unchanged. However, mortgage priority may be threatened by other types of loan modification contracts. If the amendment provides, for example, that the lender submits fresh money for a previously contracted loan, a junior pawnholder, without a subordination agreement, could take precedence over the amount of newly made-out funds. In 2016, the applicant brought an action for enforcement. The second mortgage holder promoted the applicant`s priority of consignment in this action and argued that the plaintiff`s priority should not be the 2008 mortgage, but the 2014 loan modification agreement. The second mortgage holder submitted that by entering into a loan modification agreement in 2014, the applicant had lost the priority of his mortgage over the mortgage of the second mortgage holder of 2012.

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