Spreader Agreements: Adam Leitman Bailey, P.C. Saves Buyer $8,000 in Mortgage Taxes by Using Unique Agreement
Adam Leitman Bailey, P.C. recently represented a major lender in connection with a spreader agreement. The lender’s borrowers wanted to refinance their current condo unit with a consolidation extension modification agreement assigning their current mortgage to the new lender to save a large amount of mortgage tax. Additionally, they wanted to obtain funds from their refinance to purchase the condo unit next door and combine the two units post closing for their growing family.
The lender had never extended such a loan. In order to effectuate this transaction the lender required a spreader agreement. A spreader agreement is essentially used to extend an existing mortgage’s reach to other properties. The lender’s use spreader agreements to secure additional collateral for the loan. The purpose of this agreement is to ensure that the lender may foreclose on all of the properties listed in the agreement in the event of borrower’s default on the mortgage.
This agreement would spread the new mortgage taken on the borrower’s current unit onto the additional unit allowing the borrower’s to save mortgage tax on their first unit, wait the three day rescission period after closing their refinance and purchase the additional unit, while obtaining the necessary funds to combine the two units. At the same time, the spreader agreement ensures that our client, the lender, has a perfected lien on both units.
Adam Leitman Bailey, P.C. worked closely with the lender, title co., and borrower’s attorney to ensure a seamless transaction. The borrower’s saved $8,000.00 in mortgage tax and obtained the necessary funds to combine their units. All parties involved were extremely grateful for the firm’s services.
Rosemary Liuzzo Mohamed represented Adam Leitman Bailey, P.C. in this transaction.