Q: What is a grantor? Are they financially responsible for the borrower's debt? Will it void a previous will?
My husband is refinancing his mortgage. We are now married so the bank said I have to be a grantor. It looks like the grantors (both my husband and I) are required to pay the taxes. Is this legal? Should it not say the borrower is responsible for the taxes instead of the grantors? (It specifically says, "Grantor shall pay when due (and in all events prior to delinquency) all taxes, payroll taxes, special taxes, assessments, water charges, and sewer charges levied against or on account of the Property and shall pay when due all claims for work done on or for services rendered or material furnished to the Property.")
Also, my husband had a previous will that divided the mortgage. Will refinancing it void that part in the will so I will have sole ownership of it if he dies? What are the pros and cons of being a grantor? Will it affect my credit history? Thank you for your time!
A: It looks like there are a number of different topics/questions here. Generally speaking, a bank will want both spouses to sign the mortgage, which is to say they want both spouses to consent to the lien being attached to the real estate. As a married couple, both spouses have an interest in the primary residence. If the bank is going to be able to foreclose for lack of payment, both spouses need to have signed the mortgage. ...And if both spouses don't sign, the bank is in a much worse place when it comes to foreclosure, which means they probably won't lend the money in the first place. It also sounds like the estate planning documents ought to be reviewed by an attorney who specializes in things like this. I'd be happy to be a resource if you reach out to our office!
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Nina Whitehurst agrees with this answer
A: It sounds like only your husband is going to sign the promissory note but the bank needs your signature on the mortgage to be certain that whatever marital interest you have in the house is encumbered. This is perfectly understandable. And, yes, while you would have no personal liability to repay the loan (because you did not sign the note), you would be liable for covenants made in the mortgage instrument. There is another way to do this rather than have you sign as "grantor", but most residential lenders are not that sophisticated. Commercial lenders understand this but residential lenders don't. This would involve you signing as a "third party accommodator" or a "non-recourse guarantor". You would need an experienced lending attorney to help you work with the lender on this. However, this would need to be a lender that is even willing to listen to your legitimate concerns. Some will and some won't. If they won't, I would find another lender.
Anthony M. Avery agrees with this answer
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