Current Mortgage has wrong legal description of property.
Question Details: Have been in same home for 20 years, during that 20 yrs we bought and paid in full the adjacent lot. We refinanced the home in 2006 on just the home. The refi did not include the empty lot. At that time the lender used the legal description of the adjacent lot instead of the home. We just discovered the error in 2009. We want to refi now to take advantage of low interest rates with same lender. How should we approach lender about this problem because we don't need to use the lot in the refi. What should we do with the lender about the legal description?
This is a very interesting problem and is the converse of what usually happens when this type of mistake occurs. As I understand it, the refi encumbered the far less valuable property and left your home untouched. Did the lender satisfy the original mortgage on the home? If so, that means that your home is unencumbered and the lot, which I assume would be worth far less, has the mortgage.
If this is true, the error benefits you and greatly prejudices the lender. If you were to mortgage your home, you could obtain a much larger loan than you could if you had just borrowed against the vacant lot. Of course, you would owe the debts on both properties and might not to incur such a large debt. A dishonest borrower might do just that and then default under the vacant lot loan, perhaps skipping town.
I would think that the lender would want to work this out with you, perhaps closing the new loan without closing costs in order to correct its error.
We could represent you in this and also act as settlement agent for the new loan. Or you could see another qualified real estate attorney of your choice. Because of the complexity of this situation, you should take any action until a qualified real estate attorney has performed a title examination and reviewed the mortgage documents involved.
This situation is complex and no legal opinion can be expressed concerning the outcome of any litigation without a full examination of the documents, any relevant correspondence, and legal research. This answer is given solely as general information and is not a substitute for a legal consultation, nor does it create an attorney-client relationship between you and either the writer or his law firm.
