Why Mortgage Maturity Dates and Interest Rates Are Interesting

by Isaac Benmergui, Esq on February 26, 2014

It’s amazing how information is power in the annuls of real estate law. Without information, we’re all bickering like little children. This is the case for things like mortgages – specifically, dates and rates. Those are big words in our field. If we don’t have those nailed down, we’re in trouble. This is why there’s that big piece of advice to ensure – for either side – that you have all the information listed in the mortgage or lien, everything concerning dates and rates, outlining everything about the mortgage to a tee.mortgage

Why is it important? Take a look at Bruegge vs. Farmer State Bank of Hoffman where we have some debtors borrowing money for mortgages involving real estate. To ensure lien priority, of course, the lenders have to record the mortgages, except they forgot one important aspect of all that – the maturity dates and interest rates. This is where it gets shaky as the debtors filed for bankruptcy due to nonpayment, filing complaints about the lack of maturity dates and interest rates.

Fair enough – however, the bankruptcy court took a look at the issue, deliberated, and decided in favor of the trustee in the matter. Another case, though, related to this, saw the bankruptcy court favoring the lender. And to make it even more interesting, the first case was then appealed to the district court, and they reversed that decision. You can see the load of confusion here.

Finally, the Seventh Circuit court stepped in to resolve the entire issue, because you can bet the debtors were throwing their hands up and not backing down. This is the shocking news – the Seventh Circuit ended up reversing everything – all thanks to one specific 2013 amendment for recorded mortgages. Just another reason why you need to make sure you’ve got all your information right and on paper, or else you’ll be seeing the inside of a courtroom quite often.

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