Loan Modifications

What or how many items can be modified on the Note and Mortgage before it has to be rewritten and rerecorded?
Can we lengthen the term but decrease the payments? Lower interest rates etc. (no extra moneys in all cases)

You'll have to refer to State law for that answer. You won't find it at the Federal level.

To be honest, this is a question for your legal department. In my experience, you can modify most of the loan terms (through the use of a signed modification agreement) without needing to re-record a mortgage. Naturally, there are exceptions. It is not something you will want to do often or repeatedly. I recommend that you check with your Legal, Credit Risk, and Default Services people before you decide to pursue this avenue.

Our legal department....uhum...I am the compliance department and probably the legal department (we are a small bank of $150mm) We do not plan on doing this often but my lenders (and marketing people) get creative at times.

Thank you again. I will check out the state laws. I really needa trick to know where to go to find information. State, Federal etc.

Not that I'm disagreeing with the other replies, but I guess I'm looking at it from a different perspective. A lot depends on state real estate law, but a lot also depends on the contents of the recorded mortgage.

If you record a mortgage separate from the note, you probably also include a description of indebtedness. If there is language in the mortgage referring to any "extensions, modifications, etc), you may be covered by that, or you may want to include it in the indebtedness description you usually use. A real estate lawyer should be able to provide you sample language if it isn't in your standard form. If you have an open-end (future advance) clause in the recorded mortgage, that will usually cover what you are doing. In some states, lenders record deed/mortgage modifications.

I think you have to look at the original recorded document along with what you are doing, plus standard practices. I know it's not fun to read some of these forms, but that's where I'd start.

Kathy