Mortgage Modification, Severance, and Splitter Agreement

Summary

This template mortgage modification, severance, and splitter agreement may be used by a borrower and lender to modify, sever, split, and divide an existing mortgage and note to constitute two separate mortgages and notes. This template contains practical guidance, drafting notes, and optional clauses. When a loan is modified, severed, or split, the lender's counsel must ensure that the new mortgages securing the loan maintain the original lien priority on the real estate collateral. If there are existing liens at the time the modification is made, counsel for the lender should obtain consent from those lienholders to subordinate their liens prior to recording the modification. The lender's counsel should also consult a local title insurance company for guidance on requirements for recording the mortgage(s), any necessary modifications to its existing lender's title insurance policy, and maintaining lien priority. In addition, some states impose a mortgage tax for the privilege of recording a mortgage on real property and various municipalities and counties also impose local taxes on mortgages that are recorded in those jurisdictions. You should seek guidance from local counsel on the implications of recording a modification if the jurisdiction imposes a mortgage tax. For further guidance on mortgage consolidations, see 5A Real Estate Financing § 9A.03. For a full listing of key content covering construction, see Commercial Real Estate Acquisition Loan Resource Kit. For a full listing of key content covering acquisition financing, see Junior Associate Real Estate Resource Kit (Acquisition Finance).