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#1820748 - 06/05/13 08:36 PM SD Mortgage - HELP
Tessie Offline
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Joined: Jan 2006
Posts: 155
We have a Collateral Real Estate Mortgage securing a loan for purchased land. The note matures in 2032 and is not a loan they can advance on. I know a CREM is suppose to be extended every 5 years, but what happens if it is not extended? The court house definetly doesn't know and the lawyer THINKS we would be OK if we still extended the mortgage. Was wondering if anyone has come across this before.

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#1820757 - 06/05/13 08:49 PM Re: SD Mortgage - HELP Tessie
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 79,230
Galveston, TX
It appears pretty clear to me - if all your attorney can tell you is that they "think" - you need a new attorney.

44-8-26. Collateral real estate mortgages. A mortgage which contains the following statement in printed or typed capital letters: THE PARTIES AGREE THAT THIS MORTGAGE CONSTITUTES A COLLATERAL REAL ESTATE MORTGAGE PURSUANT TO SDCL 44-8-26, is subject to the provisions of this section. A mortgage executed pursuant to this section shall be entitled in printed or typed capital letters: MORTGAGE--COLLATERAL REAL ESTATE MORTGAGE. A mortgage made pursuant to this section shall, notwithstanding the fact that from time to time during the term thereof no indebtedness is due from the mortgagor to the mortgagee, constitute a continuing lien against the real property covered thereby for the amount stated in the mortgage. Any sums not exceeding the face amount of the mortgage, together with interest thereon as provided in the instrument secured by the mortgage, advanced by the mortgagee prior to or during the term of the mortgage have a lien priority as of the date the mortgage was filed. At any time the indebtedness due the mortgagee is zero, the mortgagor may demand in writing that the mortgage be satisfied, and the mortgagee shall within ten days thereafter execute and record a satisfaction thereof. Collateral real estate mortgages may be used to secure commercial, agricultural or consumer loans or lines of credit including, but not limited to, revolving notes and credits and over-draft checking plans.

A filed collateral real estate mortgage is effective for a period of five years from the date of filing and thereafter for a period of sixty days. No sums advanced subsequent to the end of the sixty-day period, save and except sums advanced for protection of the real estate collateral and for real property taxes or insurance, are secured by the collateral real estate mortgage unless an addendum to the collateral real estate mortgage extending its effective date is filed prior to the end of the sixty-day period. An addendum continuing the effectiveness of the collateral real estate mortgage may be filed by the mortgagee within six months before and sixty days after the expiration of the five-year effective date.

An addendum to a collateral real estate mortgage for the sole purpose of continuing the effectiveness of its lien need be signed only by the mortgagee. Upon the timely filing of such an addendum to a collateral real estate mortgage, the effectiveness of the collateral real estate mortgage will be continued for five years and sixty days after the addendum filing date. Thereafter, the addendum shall lose effectiveness to secure sums advanced after the sixty day period to the extent as provided above, unless another addendum to the collateral real estate mortgage continuing the effectiveness of its lien is filed prior to the end of the sixty day period. Succeeding addendums to collateral real estate mortgages may be filed in the same manner to continue the effectiveness of the lien of the collateral real estate mortgage.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#1821000 - 06/06/13 03:25 PM Re: SD Mortgage - HELP Tessie
Tessie Offline
100 Club
Joined: Jan 2006
Posts: 155
I did look this up and read this article. My question is what happens when you don't file an extension in the sixty day period. It says in this article the "addendum shall lose effectiveness to secure sums advanced after the sixty day period". So is it saying we would be ok on the mortgage's orgional amount, but if we advanced after the sixty days it would not hold up in court? I want to know if we are secured up to the orgional amount on the mortgage or not. Would this mortgage hold up in court. And is an extension filed primarily for advances to secure them? If so why are we doing a CREM on a land loan with no advances.

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#1821059 - 06/06/13 04:30 PM Re: SD Mortgage - HELP Tessie
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 79,230
Galveston, TX
You are really asking questions that only a qualified attorney should be answering and you should be getting the opinion in writing.

Personally, I think it says the same thing you think it does. My question also is why would a bank use this sort of mortgage on a closed-end loan and how has case law in SD interpreted the meaning of this section of the State law. Like I said, if you are using an attorney that can only verbally tell you that they think you are OK, then you need a new attorney.

Even if someone from SD responds to this post, this is way too serious of an issue to rely on anything that you get from some internet posting. Your bank cannot afford to find out 6 years from now that you have a bunch of unsecured loans.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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