Legal Question in Real Estate Law in Minnesota
Request for Mortgage Note Interest Rate Correction
My wife and I recently financed the purchase of a home using 80/10/10 financing (80% primary 30yr fixed note, 10% home equity line of credit, and 10% down.
After 60+ days, we received a notification from the lender that the interest rate margin was typed incorrectly on the Line of Credit note that we signed at closing. The signed note states that after a ''teaser'' period of 60 days, our rate will be float at prime plus a margin of 0%, equating to 4.25% (with rates at that time).
The new note that we are requested to sign indicates a marin of 1.75% equating to 6% (at that time). The loan application that we signed stated a rate of 6%, with no specifics regarding adjustments, margins, etc.
Does the lender have a case to require us to sign the new agreement -- does the signed application allow them to adjust the notes actually signed at closing? If we refuse to sign, can they cancel the original note if we are current and do not meet any of the causes for cancellation stated in the note?
1 Answer from Attorneys
Re: Request for Mortgage Note Interest Rate Correction
Typically at a closing on either a purchase or refinancing, the buyer or borrower is asked to sign a contract, often called a "compliance agreement," which requires him or her to go back and sign amended documents if the originals are found to contain errors. The most common error is an error in the legal description, and I have always advised my clients that they definitely want to have that corrected.
What you describe sounds like it could be a legitimate error, but frankly I can't tell from your question if it is or isn't.
If you didn't sign compliance agreement or something like it, you shouldn't have to sign anything now. If you did, then the question is whether it is really an error or are you being scammed.
Better go see a lawyer, someone who knows their real estate. Bring all your papers for review. Be ready to pay $250 or so for the consultation. It could be seriously worth it.
Good luck.
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