In a recent bankruptcy case (In re Crane, BR 11-90592, 2012 WL 669595 [Bankr. C.D. Ill., Feb. 29, 2012]), the United States Bankruptcy Court for the Central District of Illinois held that for a mortgage to provide constructive notice to a bona fide purchaser or a trustee in bankruptcy, it must disclose all the terms set forth in the example mortgage promulgated under 765 Ill. Comp Stat. Ann. 5/11. Among these terms is the interest rate of the loan.
Possibly due to this case, FNMA created a new “MAY” change for its standard fixed rate Illinois Mortgage in May of this year, allowing the lender to change Definition (D) so that it may now state the following (italics included to identify the “MAY” change; bold, bracketed items indicate the loan specific information that a lender must input):
“`Note’ means the promissory note signed by Borrower and dated [date]. The Note states that Borrower owes Lender [alpha amount] Dollars (U.S. $[numeric amount]) plus interest at the rate of [percentage]%. Borrower has promised to pay this debt in regular Periodic Payments and to pay the debt in full not later than [date].”
DocuTech will be making this “MAY” change to its standard Illinois FNMA mortgage (Cx323), Illinois FHA mortgage (Cx376), and Illinois second lien mortgage (Cx481) for fixed rate loans. This change will take effect on July 14, 2012. If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.
July 6, 2012