Hey you lawyers

[LuckyCharms]

1) Young couple closes on $100,000 first mortgage 16 months ago.

2) Couple uses same lawyer as the credit union upon closing.

3) 16 months later, couple gets call from the credit union stating that their monthly payments are $160 too low due to a credit union mistake.

4) Credit union asks young couple to come in to set up a repayment plan for the $160 x 16, and to also sign new papers which reflect the higher payment.

Personally, I'd tell the credit union to make like a tree and fuck off. But that's me. What is some solid advice I should give this young couple? I've already told them to consult an attorney other than the one used at closing. Thank you in advance.

[saidsimplesimon]

1. Thanks Lucky

As I exit the back door of a "comfortable life", no riches or fame. my hopes are for those "moving on up".

[jberryhill]

2. I'd want to know more about the mistake

Lawyers differ in the sorts of things they’ll do. Claims of unilateral mistake are disfavored in contract disputes.

But, ultimately, and I’ve had this happen a number of times, when someone comes to me looking for help in attempting to take advantage of someone else’s mistake made in good faith in a contract or sales transaction, I tell them to find another lawyer.

Whether the credit union can go to court and get the same result of this couple agreeing to correct the mistake is not going to be anything that anyone online can answer without a review of the actual facts.

What sort of mistake are we talking about? A calculation error, or were the figures stated incorrectly in the first place? Is it obvious they are incorrect? Would anyone else look at the document and see that there’s an error? Did the couple know there was an error? Were they in a position in which they should have known there was an error? Is the amount of the error within the range of malpractice insurance which this jurisdiction does or does not require lawyers to carry?

I could go on all night....

[LuckyCharms]

4. Thanks for the answer, jberryhill.

I just got a phone call from the Grandmother of the woman in the couple, and what I typed in the OP is about the extent of what I know.

I can say with near certainty that the couple had no idea that a mistake had been made, nor were they in a position to figure it out beforehand.

Also, I have 4 separate loans with the same credit union. They have recently experienced explosive growth, with many inexperienced new hires, many of whom are in positions that they should not be in. You will get a blank stare if you request an amortization schedule, and it usually takes about 5 iterations until they give you one that appears to be somewhat correct.

[jberryhill]

7. They're going to have to eat some of that then

[pat_k]

9. I'm not a lawyer, but it seems to me, when you sign a promissory note for a given amount

... you are promising to pay that amount. If the payment schedule set up for repayment has an error in it, I can't see how it would matter to the total owed -- over the life of the loan all the principle promised must be paid back.

The only thing I'd want to be very careful about in making the correction to repayment terms is that I am not paying any more interest over the term of the loan than I would have if the payments were correct from the beginning. (i.e., I don't end up paying more interest because less principal got paid than should have been in the 16 months and/or I'm not paying more interest than would have originally been payed because the credit union is charging interest on repayment plan).

If the contracts misstated the amount of interest that would be paid over the life of the loan, I would seek "corrected" payment terms under which I paid the amount specified in the contract. If that was an understatement, I'd be seeking advice on whether I could hold them to the total, even if it reflected a lower interest rate (when you sign papers, you're looking at the total, not spending time figuring out if it is calculated correctly).

[Hoyt]

3. Not an attorney, but likely depends on nature of "mistake." Would definitely tick

me off, that’s a big mistake on a loan that size. My payment went up for reasons related to escrow for taxes and insurance, but not that much, and that’s not really a lender mistake.

Hope that they get treated right.

[LuckyCharms]

5. Thanks, Hoyt. n/t

[jberryhill]

6. Part II

But rather than to worry about who is right or wrong in these kinds of things, any dispute is an opportunity to come to an agreement.

160 a month on 100,000 seems like a pretty egregious error, but if anyone wants me to leave my house and go sign papers right now... just, no... that’s not happening for free. I wouldn’t walk around the damned block right now for less than $100.

So, okay, they screwed up and they want it fixed. Okay. Again, if it’s an honest error they have two choices. They can go to court and convince a judge, or they can make a deal. And, frankly, judges aren’t really interested in a lot or petty bullshit right now. So, they are the ones that dug the hole. And , again, if it’s an honest error, they can call the $160 per month thus far water under the bridge, eat that as their penalty for making the mistake and making me get off my ass and sign papers, and we go forward with the correct amount.

[Stallion]

8. 16 Months Seems Like a Long Time-Many Contracts Contain a "Further Assurance Clause"

From Wikipedia:
A further assurances clause is part of the standard 'boilerplate' in most sophisticated commercial agreements. It provides that a party shall provide cooperation and assistance to the other party in executing duties under the contract.
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This sometimes might be used if for example a deed or other loan document wasn't signed or even say correctly notarized at closing-that's different than a situation where they did sign the loan documents but the Credit Union doesn't like what the loan documents stated.

You might want to look for a clause that says they will agree to cooperate in signing future documents or closing the transaction etc

Also need to determine what they mean by "mistake". Is it a mistake in the loan documents or a mistake triggered by a law such as say a "roll-back tax" in property tax state. That is a common gotcha for a purchaser buying a property with a tax exemption that expired before January 1 (when most property taxes are determined) and a subsequent sale. For example, a property is brought from an estate of a decedent who was over 65 at the time of death and the owner died before January 1 and therefore the property was no longer qualified for the over 65 tax exemption on the subsequent January 1. Tax entity will roll-back the tax and charge the current owner with the tax bill. Happens all the time. If you are closing a transaction you always need to pay attention to who is liable in case of a roll-back tax. Other types of exemption which might cause a roll-back tax are agricultural exemptions and I believe there exemptions for the disabled and maybe veterans in some states