Patrick wants answers on his lender's mistake

Democratic gubernatorial candidate Deval L. Patrick has asked a bank with close ties to Coca-Cola to investigate why a $1.28 million mortgage the bank gave to Patrick and his wife was not secured for two years after it was granted.

The action comes in response to Globe inquiries earlier this year about the mortgage, which was given by SunTrust Bank of Atlanta in 2003 and was not recorded at the Norfolk County Register of Deeds until 2005. Under customary banking industry standards, a mortgage is recorded immediately, so that banks and their stockholders are protected if the borrower defaults on the loan or if there is a foreclosure.

The apparent error in the filing of the Patricks' mortgage meant that for two years the bank had no legal claim to the Patricks' Milton house if the couple had defaulted on the loan.

Complicating the picture is the fact that when the mortgage was eventually filed, it was placed second in line to an existing Bank of America open-end mortgage for $350,000 on the home, putting the SunTrust mortgage at greater risk. Patrick, through a spokesman last week, said that was also a mistake and he and his wife, Diane, have moved to restructure their debt to make the SunTrust mortgage the first mortgage on their home.

The SunTrust adjustable rate mortgage has a 4.875 percent fixed rate for the first five years, a rate that was within the typical range for first mortgages at the time it was approved in 2003. Second mortgages of that size were at the time commanding interest rates of at least one percentage point more, a review of mortgage rates show.

At the time he and his wife received the loan, Patrick was Coca-Cola's general counsel and executive vice president. SunTrust Bank has close ties to Coca-Cola, dating back to 1919 when it helped finance Coke's first stock offering. The bank now holds about $2 billion of Coke stock, and the current Coke CEO and board chairman E. Neville Isdell, and former CEO and former board chairman M. Douglas Ivester, serve on the bank's board of directors.

Doug Rubin, a spokesman for Patrick, said that last week Patrick asked SunTrust to look into both the delay in the recording of the mortgage and why it was subordinated to the Bank of America mortgage. Rubin said that, as the mortgage applicant, Patrick was not responsible for recording the mortgage at the Registry of Deeds.

``He became aware of it when it was reported in the Globe, and took steps to make sure the issue was addressed by the bank and the title insurance company," Rubin said. ``He has asked SunTrust to investigate the reasons for the back-office issue."

Rubin said the Patricks were unaware of any problems involving the SunTrust mortgage recording until a Globe reporter inquired about it earlier this year. However, the local attorney who filed the delayed mortgage lien in 2005, Robert A. Lane of Weymouth, said he had contacted the Patricks in 2005 prior to the recording, and included an affidavit with the mortgage document saying that he had ``personal knowledge" that the Patricks were alive and ``they acknowledge that they are the same persons who executed " the mortgage.

In a statement that the Patrick campaign released to the Globe in February, Lane said he did not tell the Patricks why he was asking the questions about the mortgage, and they did not inquire. Lane said he is often hired by title insurance companies to straighten out filing mistakes, and had been contacted by a title insurance firm for SunTrust Bank to clear up the problem.

Between 2003 and 2005, the Patricks received a separate, $2.6 million mortgage for their summer property in the Berkshires. They said that when they applied to the Berkshire Bank in Pittsfield for that loan, they disclosed they were carrying the $1.28 million SunTrust loan.

The restructuring of their debt will allow the Patricks, who have $5.9 million worth of loans on the Milton residence and the Berkshires summer home, to reduce their overall mortgage indebtedness by about $51,000.

According to documents filed last week at the Norfolk Registry, Bank of America discharged its six-year-old, $350,000 open-end mortgage on the Milton home and attached a similar mortgage for $299,300. Rubin said that the Bank of America mortgage would now be second in line to the SunTrust mortgage.

A Globe review of the Patricks' finances earlier this year showed that while Patrick has accumulated significant resources through his corporate work, he and his wife have also taken on significant debt. Since they first bought the Milton property in 1989, they have taken out 10 mortgages on the property, sometimes accumulating three at the same time.

In 2002, shortly after he went to work for Coke, Patrick bought a condo in Atlanta with a SunTrust mortgage that covered 96 percent of the $765,000 purchase price. That property has since been sold. The same bank provided them with a mortgage in 2002 for 94 percent of the purchase price for a $472,000 parcel in Richmond in Berkshire County. That mortgage has since been discharged.

This year, the Patricks received a $4 million mortgage to complete the construction of the Berkshire property, where they built an 18-room, 10,000-square-foot house.

The couple's mortgage payments in interest alone are currently about $325,000 a year.

Patrick has said he and his wife, a law partner at Ropes & Gray, can meet the loan obligations if he is elected governor, a post that pays $135,000 a year.

``We looked hard at the financial implications of dedicating ourselves full time to public service and planned accordingly," Patrick said in a statement. ``Through hard work, great opportunities, and continued blessings, we are in a wonderful financial position today to make this leap."

(Correction: Because of a reporting error, a story on Deval Patrick's mortgage in yesterday's City & Region section misstated the number of rooms in Patrick's vacation home in the Berkshires. The house and a connected carriage house will have 13 rooms and seven bathrooms.)