Q: Our lender purchased our mortgage in 2003. Even though we own 35 acres of land, we have had only a two-acre cutout involved in the home mortgage for the more than 30 years we have owned the property, the lender is insisting that the collateral is the entire property, not just the two acres.
We have never had any type of loan or mortgage on the remaining 33 acres. We have a security deed from our lender and several other supporting documents indicating only two acres in the legal description of the mortgage.
We have made a complaint to the OCC against the lender, as the various customer service people we have spoken with have been very unreceptive. Can you help us clear this up?
A: While you indicated that only two of your 35 acres are encumbered by your loan, it would appear from your letter that at some point in the past, all of your land became encumbered and subject to a mortgage with your lender
What you need to do is find a copy of the survey you obtained when you purchased your property along with the legal description for that property. Then you need to find the documents from when the loan was purchased in 2003.
Did you refinance at that time? If so, the document you are looking for from your refinance is a document labeled mortgage, trust deed or mortgage deed. If you find that document, you should find a page attached to the document that outlines the legal description for the land that was mortgaged in 2003.
If you compare the legal descriptions and determine that the land you refinanced in 2003 is the entire 35 acres, you will have trouble convincing the lender, or most anyone, that your intention was to encumber only two acres out of your 35.
It’s important to note that a person in your situation must always make sure they know what they are signing at their loan closings, especially when you are intending on obtaining financing on one parcel of land and not another.
We’ve seen situations where homeowners own two parcels of land in a city but want to obtain financing on only one of them, only to find out that the closing agent searched that person’s ownership of the land and included both parcels of land in the legal description given to the lender. A well-informed homeowner will know to make sure the right legal description is attached to the loan documents at that time to avoid any potential confusion.
It’s been some time since this occurred, but if your loan application from 2003 indicated that you were obtaining a mortgage on a home on two acres of land, you might have a better chance of getting your current lender to release the lien on the property.
Nevertheless, you will have to find incontrovertible information to give to your lender to show that someone other than you and the lender made a mistake when the bank included all 35 acres in your refinancing. Your recollection may actually be incorrect and your refinance papers may actually reflect your intent back in 2003 to obtain financing and encumber all 35 acres.
Your complaints to various agencies may not get you too far if you don’t have the necessary documentation to prove to your lender the mistake made in 2003.
If on the other hand, your current loan documents don’t include the other 33 acres and you have incontrovertible evidence that the mortgage is only on two acres, we aren’t sure what your problem is with your current lender. If the 33 acres isn’t subject to the mortgage, you should be able to freely sell that land and even take out a separate mortgage on it.
For more information, you might want to sit down with a real estate attorney to go over your documents from the refinancing, if you did indeed refinance in 2003, and any recent documents you have exchanged with your lender.