Over encumbering Real Estate With A Mortgage
Does the promissory note have to be recorded too?
Most private lenders will do it to protect themselves. An escrow officers I spoke to does a lot of private lender stuff and she said that you do not need to record the note.
As far as I know you don't have to record the note. Some title companies do it because they are
usually insuring that mortgage and its an underwriting requirement and
that's only on the private mortgages when they don't use the Fannie Mae documents. With private
lenders unlike a regular mortgage (e.g. Countrywide, etc..) you usually attach
a copy of the note when you record. If you
use a Fannie Mae Mortgage then you can just record the mortgage. Generic
Mortgages you usually attach a note.
The big corporations don't
bother because they are insured but the private lenders usually always do,
but they aren't obligated to as far as anyone knows.
What is on the typical mortgage note, the amount, the interest and the
expiry date?
The typical mortgage says the date executed who the lender is, who the borrower is,
the amount and how long the person has to pay it back and any terms that
private lender chooses to add in. The interest rate is usually on
the note but that can vary. You can probably go online and
double check by looking at a blank one.
The Over encumbering Of The Property With A Friendly Lien
The best thing to do is
you and your "friendly" sign and notarize your mortgage on one day. Then
wait as long as you feel looks proper to sign your release of lien and have
it notarized on that other day. You can then record your mortgage, having the
release in your possession. You can record the release any time after that, in case that
person became unfriendly or dropped dead, so you could take it off if needed
by recording that document. .
That should protect you as far as your friendly person goes.
I really can't see any reason why you couldn't attach something to your own
property, I mean how would anyone prove it shouldn't be there?
I would only suggest extreme caution with the satisfaction or release of lien. I
would triple check on the laws regarding that. You don't want to find
yourself suddenly owing money you never borrowed.
With your homestead property they can't go after you, but
investment property can be put in the trust so you don't show up as owner.
Could The Mortgage Be Sold?
Usually it is the Note that is sold...so if there is no note......Obviously, we want to find a copy of a mortgage that is very simple so it costs
less.
There are some lenders who can do an assignment of mortgage and you know
that they are going to sell your loan. Some lenders also have verbiage
saying they can sell your note at some point if they choose. Like you said
without a note there is probably no way that would apply. There are also
some with the verbiage that say they can't sell your loan.
Someone might be able to file something against anyone and make them spend
time and money proving that its incorrect. I am out of my element at this
point as to what someone could do legally with a mortgage. that doesn't actually
have a note.
In this case, you would go ahead and record the mortgage on Property Street. The mortgage says he is lending you $50000 and then you record
it. You have the SAT (satisfaction of lien) in your possession. If for some reason anyone ever
asks you just say he was lending money for an investment property and then
it fell through and you never actually received the money.
That way you
have your release dated when you want and you just say you forgot to record
it. That way you don't have to prove money changing hands or payments being
made which would get way too complicated.
Why Over encumbrance Won't Work
Would it really
deter anyone from attaching to the property though?
They may think its
worth it so they can get in line if you try to sell. If the property is appreciating, eventually their fourth in line lien may actually be something that they can foreclose on and expect to get their money. That is an incentive to really over encumber and not just encumber to the limit of the property's value.
The costs of Over encumbrance
Don't forget that in Florida have to pay doc stamps and intangible taxes on a mortgage. The cost for a $50,000 mortgage would be 275.00 + recording fees
The cost for a $75,000 mortgage would be 412.50 + recording fees. In Florida, unless you go through a credit union then everyone has to pay these.
A deed of trust (mortgage) of 8 pages would cost $69.50 to record + doc stamps and intangibles depending on the loan amount.
In California it only costs recording fees for a warranty deed. So I imagine the mortgages are the same. It doesn’t look like they charge any fee other than to just record the pages of the document. $7.00 1st page and $2.00 ea. Additional page.
Over encumbering Real Property With A Lien (Back To Start)
