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Errors in the legal description can have similar effects. If an error exists, a quiet-title action or reformation may be necessary to correct it. As is the case with missing legal descriptions, a third-party buyer may not be bound by the pre-existing mortgage -- or a subsequent lien-holder may take priority.
Corrections to typographical errors and similar items could occur with an affidavit of scrivener's error. This action depends on the nature or severity of the error and on the title underwriter's willingness to accept the affidavit for title-insurance purposes. For example, a misspelling of a subdivision name might be correctable, but listing an incorrect subdivision would not.
It's also important to make sure all owners of a property agree to mortgage the property. All owners must be named as grantors or be identified in the mortgage as agreeing to the grant of the mortgage. And all owners of the property must sign the mortgage.
The lender only can enforce a mortgage against those who granted and signed it. Failure to ensure all owners did so can create problems. Moreover, in some states, failure to have one spouse execute the mortgage conveyance may make the mortgage completely unenforceable.
In some situations, not all owners of a property are obligated on the note. For example, an individual may have qualified and agreed to take out the loan. But owners of the property that's collateral include someone else who signed the note and another person who didn't.
Non-obligated owners must agree to mortgage their interest in the property along with anyone who signs the note. Simply having the non-obligated owner sign the mortgage without being named as a grantor in the body of the mortgage or otherwise expressing a grant of the mortgage may be insufficient for mortgage enforcement. The non-obligated owner must be named as a grantor in the body of the mortgage.
Failure to state the marital status of parties signing a mortgage also may present problems. At loan origination, it's crucial that all individuals with an ownership interest in a property consent to the mortgage as grantors and by executing the mortgage. If an individual is married, the spouse may have an ownership interest in the property. If a married individual signs a mortgage without the spouse's participation in the granting of that mortgage, the mortgage may not be enforceable against part or all of the property. Stating the marital status of the individuals signing the mortgage directly on the mortgage instrument provides some assurance that there are no undisclosed marital interests.
Processing of a mortgage after closing also can present problems if not performed correctly. Making certain the mortgage is recorded after the loan closes seems fundamental. But it often fails to occur. Again, tremendous financial risk exists.
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