Mortgage Documents: ‘May’ equals ‘Shall’

In a recent decision by the U.S. Bankruptcy Court for the Central District of Illinois, the court held that mortgage documents are flawed when they fail to state the maturity date and interest rate of the loan, even though the underlying statute says that information “may” (not “shall”) be included in the contract.

In re: Crane v. Gifford State Bank, No. 11-90592 (C.D. Ill. 2012), the federal court determined that the state statute includes mandatory provisions that lenders must include in their mortgages to provide constructive notice to a bankruptcy trustee.

“Until there’s a fix, you need to comply with the mortgage statute perfectly,” McGargill said. “To be ultra-safe, you’re going to have to turn the word ‘may’ into ‘shall.’ I just don’t see any way around it at this point – you have to have the interest rate and maturity date in there.”