Are all Bank Loan Documents the Same?

A loan agreement is a legally binding contract. If you do not abide by any of the terms of the loan agreement, a lender can impose penalties. These penalties could include charging late fees; posting negative information on your credit report; repossessing collateral if you took out a secured loan such as a mortgage or car loan; or seeking a court judgment against you and potentially placing a lien on property or garnishing wages.

It is imperative that you fully understand what you are agreeing to when you sign bank loan documents because of the serious consequences of breaching your loan agreement.  Not all bank loan documents are the same, so you need to carefully read and review each page of your agreement to ensure you know your obligations. An experienced attorney can help you to review bank loan documents and to make informed choices about whether a particular loan is a good one for your needs.

Not all Bank Loan Documents are the Same

Depending upon the type of loan you are taking out, state and federal laws may require some standardization when it comes to the types of documents that you are provided with. For example, the Real Estate Settlement Procedures Act (RESPA) mandates that lenders provide specific disclosures and forms to people who are buying real property like a home or a condo unit. RESPA requires that banks give borrowers a good faith estimate of settlement costs; a mortgage servicing disclosure statement; a HUD-1 settlement statement; and an initial escrow statement.

Even when every bank is required to give borrowers the same types of documents, this does not mean that the exact documents provided are the same.  Standard HUD-1 settlement sheets are used, for example, but the actual numbers on those settlement sheets are going to be specific to your loan.  For example, every bank may use the same HUD-1 settlement sheet to summarize costs assessed to the buyer and seller.  However, no two buyers or banks are likely to have the exact same details for origination fees; title insurance costs; appraisal fees; survey fees, down payment, purchase price, loan payoff and other expenses.

You need to look carefully at bank loan documents to understand exactly what the terms of your loan will be. If you are still shopping around for a lender, you need to compare the documents that the banks are providing to you that detail what the total costs and fees will be. Banks can represent things in different ways, making it difficult to comparison shop and difficult to know exactly what the final terms of your loan agreement will be.

An experienced Las Vegas business lawyer should always be consulted to review bank loan documents and to provide comprehensive information to you about what the terms of your agreement are. Your attorney can help you to make sure that the documents are sufficiently protective of your rights and that the terms of the loan are reasonable.  Taking out a loan is a major obligation, so do not sign any paperwork until you have had it reviewed by an attorney. Pintar Albiston LLP is here to help you review your loan agreement, so call today to schedule a consultation with a member of our legal team.