One law, two new rulebooks - and a 30-day clock now ticking on some home sales
Missouri servicers get a clear answer: change a loan's terms and keep your lien's place in line.
Lawmakers passed Senate Bill 834, sponsored by Missouri Senator Sandy Crawford, a package that rewrites two corners of the state's property and lending law. For anyone who holds or services mortgages, the half that matters is the new Uniform Mortgage Modification Act.
Start with the problem it fixes. When a lender and a borrower agree to change the terms of an existing mortgage - stretch the maturity date, cut the interest rate, forgive some principal - a worry has always sat in the background. Does that change count as a brand-new loan? If it does, the lender can lose the priority of its lien, and creditors who recorded later can leapfrog ahead. For anyone doing modifications, that is a live risk.
The new law puts it to rest. When a mortgage is modified in the ways the bill spells out, it keeps securing the debt as changed, and its priority does not move. The change is not a novation - a legal reset that treats the deal as a fresh obligation. Priority holds even if no one records the modification in the public land records.
The list of protected changes is built for how workouts actually happen. It covers extending the maturity date, lowering the interest rate, capitalizing unpaid interest, and forgiving or reducing principal. It covers switching an adjustable rate to a fixed one, or the reverse, so long as the change does not raise the borrower's rate on the day it takes effect. It covers reworking escrow requirements for taxes and insurance, and adjusting payment schedules that follow.
The protection has edges. It does not reach releasing property from the mortgage, adding or swapping a borrower, or assigning the mortgage to another party - those stay under other law. Recording rules, statutes of limitation, and the required content of a mortgage stay exactly where they were.
The bill's other half leans toward real estate but is worth a servicer's attention. The Missouri Residential Sale Leaseback Protection Act governs deals where a homeowner sells the house and rents it back. Buyers must give the seller a bold-type warning at least 14 days before signing - stating plainly that the seller will no longer own the home, could face eviction, and may lose the right to buy it back. No closing can happen for 30 days after signing. Violations carry a civil penalty of up to $10,000, and the attorney general can sue to enforce the rules.
The modification rules apply to any modification made on or after the law's effective date, whenever the original mortgage was written. The bill does not state that date, and the enrolled text does not show a governor's signature.
