Legal Question in Real Estate Law in North Carolina

Mortgage Modification Mistake of Fact

Q. My ex-wife purchased a home five years ago and

upon reviewing her records I discovered that her

Original Mortgage had been INCREASED $100,000.00

one year after the closing. She was sent a package

of papers to sign and buried in the pile was an

authorization form to increase her sale price by

$100,000.00 and stupidly, without realizing it,

she and her new husband signed it! The reason for

the "adjustment" was the fact that the "Original

Contract" was in error by $100,000.00. Since this

error was found a year later shouldn't they have

had the option to VOID the contract, if they

wanted too? [YES] With that kind of error, was the

contract EVER LEGAL to begin with? [YES] Where does

"Truth In Lending" enter?

A. I'm not sure what you mean by increase the SALES

PRICE. If you mean the amount owing was increased,

then contracts can be modified on the grounds of

mistake of fact. If your "EX" had not agreed to

the modification, the Mtg. Holder would have had

to file suit and have the court modify the mtg.

Your EX would have had to hire an attorney and be

subjected to legal proceedings and expense. The

mtg. holder would remember and take her actions into

consideration in dealing with her in the future.

As far as Truth in Lending, she would probably

have some cause of action to rescind if there were

errors. Then they would have to come up with

the money to pay off what they owed or lose the

property. They could have negotiated for better

terms of interest, etc. in exchange for consent to

modification.

William W. Fernandez

William W. Fernandez, Attorney at Law

250 Panama Road East