16 Feb Beware the “Missing Loan Documents” Letter
Recently, a colleague of mine was given a letter from a client. She had received it from a law firm, and it said:
We are your mortgage company’s lawyers. We are attempting to reproduce certain loan documents that are now missing from your loan file. Enclosed you will find a Loan Security Agreement. Please sign it in the presence of a Notary Public and return it to us in the enclosed prepaid envelope.
The client said that she was afraid that this meant she was in some sort of trouble with her mortgage, and asked my colleague for advise.
The advise was to ignore the letter. Why? Because it really means that the lender can’t find the Mortgage Note, and is trying to “fix” things by having her sign a brand new one.
Signing a new mortgage note generally isn’t a good idea. It may create liability and make it easier for the lender to foreclose against your property. If there were violations of the federal statutes in connection with the loan, it may prevent you from suing for relief. It will restart the running of any statutes of limitations related to payments under the mortgage. And it results in there being no consequences for the lender in having sloppy (at best) or fraudulent (at worst) procedures in effect for dealing with closings and the maintenance of documents.
Check with your lawyer before doing anything, but don’t assume that there’s something wrong on your end, and don’t assume that this is something that you need to fix.
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