No, we do not believe that you are required to record a new mortgage when modifying a loan’s interest rate. However, we recommend engaging your bank’s counsel to review the relevant loan documents and ensure that your bank’s lien position will not be affected.

Illinois courts repeatedly have held that a note “given in renewal of another note and not in payment . . . does not extinguish the original debt or change the debt except that it postpones the time for payment.” We believe that the same logic would apply to a change in terms agreement that modifies, without extinguishing, the original note. Additionally, the Illinois Conveyances Act expressly provides that recorded mortgages do not need to include the loan’s interest rate. Consequently, we do not believe it is necessary to record a new mortgage due to a changed interest rate.

For resources related to our guidance, please see:

• State Bank of Lake Zurich v. Winnetka Bank, 614 N.E.2d 862, 867 (2d Dist. 1993) (“Indeed, the ordinary practice of lending institutions is that where a note is given in renewal of another note and not in payment, the renewal does not extinguish the original debt or change the debt except that it postpones the time for payment.”)

• State Bank of Lake Zurich v. Winnetka Bank, 614 N.E.2d 862, 867 (2d Dist. 1993) (“Although a renewal note may in some cases operate as payment of and a discharge of the original note, the evidence must indicate the parties intended that the new note should serve as payment of the outstanding note. Here, the evidence indicates the parties did not intend the September note and mortgage to be a new and separate transaction which extinguished the June note. The June mortgage was never cancelled or released, and the language therein provides for additional advances at the option of the mortgagee . . . The testimony of State Bank loan officers also established that when a balance of a loan is increased, a new note and mortgage are typically executed . . . Accordingly, we find the September mortgage was a renewal or modification of the June mortgage and the June mortgage was a valid and subsisting lien on the subject property.”)

• Heritage Bank of U. Park v. Bruti, 489 N.E.2d 1182, 1184 (3d Dist. 1986) (“We have no quarrel with the statement that a renewal note may operate as payment of and a discharge of the original note. However, from the aforementioned affidavit and the letters attached to the motion for summary judgment we find no evidence that plaintiff and defendants intended that the new note should serve as payment of the outstanding note.”)

• Illinois Conveyances Act, 765 ICLS 5/11(b) (“The failure of an otherwise lawfully executed and recorded mortgage . . . including the failure to state the interest rate or the maturity date, or both, shall not affect the validity or priority of the mortgage, nor shall its recordation be ineffective for notice purposes regardless of when the mortgage was recorded.”)