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It is old news that in this economy, many homeowners are struggling to make their mortgage payments. The good news is that there are various government programs and many banks that are willing to refinance your mortgage and to otherwise readjust the terms to allow you to keep your home. Regrettably, some banks are also taking advantage of this situation by requiring homeowners to waive valuable legal rights in exchange for giving them mortgage relief.
Perhaps now, more than ever, it is critical that you read the fine print before agreeing to these terms. Of course, the problem is that when buying or refinancing a home, loan documents, title documents, credit applications and the like are often several inches thick and are almost incomprehensible to the average person; however, you have the right to review each and every one of these documents in advance of signing them and I urge you to do the same. Ask your mortgage broker and the escrow officer for copies of all documents before you walk in to the escrow office to sign documents. Sit down at your kitchen table at least a few days before, if not a few weeks before, closing in order to highlight anything that does not make sense. If your mortgage broker, real estate agent or escrow officer cannot fully explain these terms to your satisfaction, buy an hour or two of a lawyer’s time to help you understand. Remember, you are about to invest hundreds of thousands of dollars into this home which, for most people, will be the most valuable asset that you will ever own. You will want to be able to take comfort in the fact that you know everything that you can about the documents you have signed.
Finally, if you come across a provision in your loan documents wherein a bank is requiring you to waive your right to sue the bank in the event that you later learn that the bank has violated state or federal law related to your loan, stop right there! Contact your mortgage broker and demand that this provision be removed. The worst thing that could happen is that the bank will refuse to remove it. If that happens, you have the option of finding another lender or agreeing to sign the loan documents with that provision in place (although I strongly recommend against it). Regardless of which option you choose, it is critical that you take the steps necessary to be informed and to ask questions.