I have a Chase primary and secondary loan. The primary is going to be paid in FULL but we have to short the secondary. The problem is the primary was never recorded. We've been trying to find out WHO can help us for the last 30 days at Chase - it's gone to the office of the President and still NOTHING.. no one can seem to help. I escalated to Fannie Mae who directed me back to Chase - Anyone have a clue where I can call to get this lien perfected?
I am sorry.
I did not mean there was an assumed mortgage at anytime.
Just a "lender assumed to be in 1st position"
Sorry for the confusion.
I agree. In order to purchase the home there would have been a title/escrow company who handled the funds and recorded the documents. Part of their job (and their insurance) is not only to convey clear title, but to make sure they properly record the transaction. chances are, something was incomplete on the mortgage/deed of trust and the county refused to record the document OR it was just recorded incorrectly (maybe there is a neighbor who has this mortgage recorded incorrectly against their property). Who knows...but at this point the goal is to simply get this straightened out.
First step, find out who recorded the 2nd mortgage or who handled the closing for the seller's previous transaction. Chances are, that is the title company who would have a copy of the original documents and can correct the recording. Also, the 2nd mortgage would know they are already subject to the first mortgage and a mistake like this isn't going to have the 2nd suddenly saying they are in first position...ESPECIALLY since both loans are with Chase. They would NOT want to screw themselves or their investors by trying something shady which could tie this deal up in court for years.
Step two, just negotiate with the 2nd as if everything was normal. If you over-react to the situation then that is going to make them suspicious and think that something is wrong...which could lead to them not wanting to do the deal at all. Just get a payoff from the first mortgage, prepare the hud as usual, and send the package to the 2nd to get them to approve the short sale.
Remember, YOU are the glue that holds the short sale together until closing. Keep calm and the work to clear the title issue while you negotiate with the 2nd. Any title issues I have come across has been dealt with in 30 days or less. This is similar to a situation I had a couple years back and the previous title company got it all straightened out...the longest part was just waiting for them to find the original file in their archives and then they took care of the problem in a matter of days.
Good Luck!! :o)
This is NOT an issue for an agent. This is an issue for an attorney. IT very well might be that the first is a faulty loan altogether and may not even exist under law!
From the point of view of the seller...if there is no first, then the second is the first. Paying the first when not recorded and faulty will create a condition of the second that may have the lender attempting to collect deficiencies. That harms the seller if legally there never was a first! You can not allow harm to yoru seller! You could have liability for that for even suggestiing the perfection of an illegal document!
I would NOT use a title company, instead get an attorney for title and use an attorney only. If the first legally is faulty and has become a second, or can not exist, then it changes everything! Be very careful that your E&O does not have to cover you.
By the way, it is NOT your business to worry that a lien be perfected..it should be your position that the Seller, who you represent, has all legal options and rights resolved to the Seller's benefit FIRST. Then the SS can continue. Do not try to perfect anything, instead use an attorney for title and another for the seller's rights. Then you can address the lender and its rights, if there are any.
At least in Utah, any mortgage for a purchase that was not recorded properly does NOT invalidate the mortgage. So again, I still say it is best to check with the title company that was supposed to handle the recording and see if they can fix the situation.
Also, I have seen MANY homeowners hire attorneys, pay thousands of dollars to invalidate their mortgage, and ultimately end up losing their home to foreclosure anyhow. If you have a short sale deal that CAN satisfy the debt, release your seller from liability, and do it all for little or no expense to your seller then you should try to do what you can. If the title company that was supposed to record the first mortgage screwed up and has caused this issue they can fix it. If they cannot fix it THEN have your seller seek the advice of a good title/real estate attorney.
Lastly, you don't want to have an attorney spend a bunch of time invalidating the LIEN against the property because the chances of a judge actually saying that the homeowner no longer owes the DEBT is very slim. So even if you get an attorney involved to try to invalidate the mortgage it could still leave your seller open to owing the entire loan balance on the first (like a gigantic signature loan). If you can resolve the situation with the short sale, get the seller out of the debt, and the title company can clear the title issues then that would be a win/win for everyone. Yes, it is always fun to screw the banks once in awhile since they screwed all of us...but it is more important to look out for your seller.
Keep us all posted on the progress so we can see how it turns out! :o)
NOTES and DEEDS
NOTES are the IOU/THE PROMISE TO PAY.
Trust Deeds are security instruments.
The absence of a deed does not remove the IOU/THE PROMISE TO PAY.
The absence of the deed means their is no lien on this property to secure the IOU/THE PROMISE TO PAY..
The deed of trust is currently used in Alabama, Alaska, Arkansas, Arizona, California, Colorado, District of Columbia, Georgia, Hawaii, Idaho, Iowa, Michigan, Minnesota, Mississippi, Missouri, Montana, Nevada, New Hampshire, North Carolina, Oklahoma, Oregon, Rhode Island, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin and Wyoming.
FHA Mortgagee Letter 2009-13 dated April 10, 2009 clarifies that New Mexico should also use the deed of trust for residential real estate transactions.
Signing a deed of trust gives title, or ownership, of the property to a trustee, who acts on behalf of the lender; however, the homeowner has the right and privilege to live in, use and enjoy the property.
If the loan secured by a deed of trust becomes delinquent, the lender can request that the trustee foreclose on the property in order to be paid or acquire title to the property. Unlike a mortgage, a deed of trust allows foreclosure to proceed without going through the courts.
Read more: Which States Are Deed of Trust States? | eHow.com http://www.ehow.com/about_5488538_states-deed-trust-states.html#ixz...
I fully understand that the absence of a mortgage or trust deed does not necessarily in itself end the debt of a loan document.
It does however change what the negotiation is about and what the acceptable recovery of the note might be. Example: Balance of mtgs 180K property value 90K 100K mtg note. The first mortgage turns out to be a second because of legal filing requirements not being met (second takes the first position (unless in the second it states the exact loan it follows).
Now the second mortgage is the legally the first and NOT upside down! Then if what was the first can not legally be filed for some reason (the mortgage itself is deficient and ineffective let's say).
The second mortage holder can legally say ..NO I want all my money there is enough there to pay me. there is no original first to deal with and therefore the original first mortgage has NOTHING to say about the sale and in fact may not even legally be able to sieze a single dime at closing...remember there is 10K on the table.
This leaves the 100K unsecured note that was meant to be a first. The question now is: based on the debtor's ability to pay and income etc, what can the note holder expect. If the expected recovery is 10% on a note of that quality (say it is now a C- note...or lower...
So teh negotiation is ..take nothing at the closing or take the 10K. However if the Seller LETS you take the 10K then he wants a full deficiency release. or at least negotiate it way down. Almost no one pays more than 20% in the average state and I have seen many deals at less than 5-8% for unsecured debt releases in certain circumstances.
As I said earlier, this entire matter is for an attorney ...DO NOT commit to MAKING the original first mortgage take first position. That may actually not be possible or may be illegal. It also may not be in the best interests of the client, you could get sued by the original second mortgage even!...and you are responsible for the client best interest at all times in most states, even above your commissions!!!
I hope you see my point here. Find out the LEGAL condition from a dis-interested third party attorney..then determine the best acts to take for the client!
Please do not take my clarification of TERMS as introductions to do a certain act.
Many (maybe not you) agents that do not have an in-depth lending background tend to forget what a deed really is.
I generally agree with your past comments. This is a legal issue based on the laws of the land. I do not know what state this property is in. I also believe that agents and brokers should competently serve their clients Hopefully without risking inappropriate guidance to the client which can cause them unexpected damages.
Also I suspect we are all giving suggestions/advise we believe are valuable to this topic. Our peer suggestions are just one form of resource. I expect readers to take our inputs and do their own validation as to how this may help their situation.
Any progress on this situation?
Please let us know how it progress.
FYI even if a note is not recorded, it is still valid if done properly. That is an important part of this for us to all remember.
I am in California. We do not record NOTES.
NOTES do not need to be recorded in California to be valid.
Do they record NOTES in your location?
Ghana, I'm pretty sure Judi meant the mortgage. And of course, the unrecorded mtg would still be enforceable against the owner, just not third parties.
You may be right with that. I figured out what state Smitty's property may be in.