Has anyone ever dealt with a No Lien Affidavit?  I have a Well's Fargo 1st and 2nd.  Well's has accepted all documentation but they have their own title report (old) that has a judgment on it against someone not affiliated with the property (my title company has removed it) and also has the 2nd mortgage on it (keep in mind it is also Well's) and 2 water liens (which I have a buyer commitment letter that those will be paid for by him).  Well's sent me the message below:

2. A deed of trust to secure an original indebtedness of $77,000.00, and any
other amounts or obligations secured thereby, recorded SEPTEMBER 20, 2005, as
INSTRUMENT NO. 200509200211 of Official Records. Dated: AUGUST 26, 2005 Trustor:
RICHARD S XXXXXXX, A MARRY MAN AND ABEBA Y XXXXXXXX, NON-VESTED SPOUSED, HUSBAND AND
WIFE Trustee: WELLS FARGO FINANCIAL NATIONAL BANK Beneficiary: WELLS FARGO BANK,
N.A. NOTE 1 A document recorded JUNE 04, 2010 as INSTRUMENT NO. 201006040306 of
Official Records provides that T.D. SERVICE COMPANY OF WASHINGTON was
substituted as trustee under the deed of trust. JUDGMENTS/LIENS/ADDITIONAL
INFORMATION 3. A claim of lien recorded JANUARY 19, 2011 as INSTRUMENT NO.
201101190796 of Official Records. Amount: $454.53 Lien Claimant: CITY OF XXXXXXXXX
4. A judgment, a certified copy of which was filed/recorded DECEMBER 14, 2011 of
Official Records. Case No: 11-2-09602-3 Creditor: JOHN HXXXXXXX AND AMBER 
XXXXXXXX Debtor: MARY XXXXXX, GREG XXXX AND ARTHUR XXXXX Amount: $5,562.00 and
any other amounts due thereunder. 5. A claim of lien recorded JANUARY 15, 2013
as INSTRUMENT NO. 201301150276 of Official Records. Amount: $3,266.46 Lien
Claimant: CITY OF XXXXXXXXX

 

They want a NO LIEN AFFIDAVIT that references all the items above and then signed and notarized.  Basically stating that there are no liens against the property.  I am not going to get anyone to sign off on that.  Originally they only wanted a buyer commitment for the 2 City liens and a no lien affidavit for the $77k 2nd and the supposed judgment (Item 4).  They will not accept my Title company's title report so the title company signed a no lien affidavit stating those judgments do not belong to this property.  anyone know how the 2nd mortgage should be addressed?  Well's keeps saying I need a no lien on that also, but it's also Well's and I do not have a First payoff approval.  Help!

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This is a standard demand - usually FHA. It is not as ludicrous as some of their other rules. FHA demands that all liens, etc, be accounted for before issuing the ATP - it makes more sense to me to wait until you have a buyer and maybe he can handle some of the debts.

Anyway, the simplest is to copy the text that they gave you, put in a sentence like "None of these liens belong to me", seller signs/dates and has it notarized - done.

Yes they do a lousy job of title search, but they don't care. Anything to kill a short sale makes the servicer more money - since they are paid to "maintain" a file and they lose that when the SS goes through. Don't waste brain power on it, just do it and move on to the next hoop.

Hi Joe~  Thanks for the reply.  We do have a buyer and they have signed a commitment letter for the 2 city liens (water) and have shown proof of funds to pay those (as required by FHA).  I have a notarized letter from the title company that the judgment against the title holder does not belong to him.  I do not have a notarized letter from Wells for the 2nd mortgage stating that is no longer applicable.  That is what the first (Well's) is wanting now.  When I asked them how I can do that since they have not approved the 1st and, therefore, have not let us know what they will give the 2nd....they said they have nothing to do with negotiating the 2nd????  They did before since they are both Well's and now they don't?

I am wondering if I can just have the Title holder (he was a 3rd party lien holder originally who was told to foreclose on the property to protect the $100k he had loaned the family....note holder is now widowed...husband passed away which is why she lost the house) sign a complete affidavit stating NONE of the liens are his.  When I stated that to Well's they said they need to have a clean title including the 2nd mortgage for $77k.....it needs to be signed and notarized that the 2nd mortgage is to be paid off completely for a short sale to happen.  Any recommendations?

Well, you went from a standard no-lien aff to a whole blizzard. 3rd party foreclosed?? In what position? How'd that happen w/o the superior mortgages being paid off first? And lesser mortgages not wiped?

That aside, yes, WF does negotiator 1st and 2nd separately. The 2nd WF negotiator would call me to find out what is going on with the 1st. Seems pretty nutty. You need to get with the 2nd negotiator and assume it is pretty much a separate bank. Then you can tell the 1st what the 2nd wants, if the 1st isn't going to tell you what it will give the 2nd, which I guess it has not. Yep, crazy stuff, but that is the WF way.

Ahh I see.  Yes this sale is a messed up one.  The 3rd position person was a family friend to the borrower who passed away unexpectedly.  He had loaned the borrower $100k to help out finances about 6 months prior to borrow passing away.  He then was told by an attorney that he needed to foreclose on the property to protect his $100k so he did.  So Wells has filed a lawsuit against him and the estate (pretty much everyone) for both the first and second.  They want paid off for both and then some but have agreed to look at a short sale.  So the first obstacles have been that the widow was not on the first note (only second) and it took almost a year to get her to be authorized to speak about it to Well;s (no will and no probate...nothing...she has maybe $300 to her name).  Then Well's would not let her give authority to anyone else (not me) to negotiate.  I have gotten around that so here we are 2 years into this!  The first can do a sheriffs sale here in Washington to reclaim their interest, but the second's only recourse is the lawsuit.  The only way to stop that is for the borrower to file bankruptcy and she cant even afford to do that.  So the 3rd party family friend has agreed to participate in the short sale and give up his right to the property (he is being sued by both the first and second as well).  Its a mess and keeps getting more complicated.  It has taken 6 months for the first to understand that the borrower is not on the title nor has ever been.  They kept wanting her to be on title which they said was an FHA requirement.  I thought we were going to have to quit claim it to her from the 3rd party, but it appears they now get what has happened.  Now I have to clear that 2nd off Title.

Thanks for the insight!

I really do not see a problem.  This type of affidavit is used all the time when a Seller's name is common and there are other "Bob Smith" people with judgments, etc.  They want the Seller Bob Smith to sign an affidavit that he is not one of the other Bob Smiths.  The title company usually has to certify this as well.  Normal title insurance is nothing more that the title company certifying that they researched the title, etc.  If none of these liens are the Seller then have them sign the form.  What is the problem?

Here is one our lawyer drafted.  You can format it to use however you want. Wells accepted this.

Attachments:

Thanks Smitty.  This is what we had already but they would not accept it.  It needs to specifically address all the liens/judgments and then they want proof that the creditors have signed off that they will all be paid off.

All FHA short sales require the junior liens to be removed, or the information must be such that the FHA 1st lender must reasonably believe that the junior liens can be removed.  FHA will only give $1,500 toward junior liens plus the Seller can use the $1,000 FHA incentive.  You need junior lien holders to agree to release for a total of not more than $2,500, or get the Buyer or someone else to pay the liens.  Either way you must have those lien releases in writing.  Notice I said "lien releases", not short sale approval letters.  The releases do not need to be payment in full or contain a release of liability.  The release just needs to be for the lien.

Thanks, Jim.  I have that info and corresponding notarized letters from the buyer and seller, but how do I get the 2nd (Well's) to sign off on releasing the 2nd mortgage (around $85k now).  The first just sent me an email yesterday stating I MUST provide a notarized letter of lien release from the 2nd for that mortgage.  They are stating it MUST come from Well's Fargo.  I thought that maybe if I provided a notarized affidavit from the seller (3rd position private party who foreclosed thinking he was protecting his $100k 3rd position lien...ugh) that it would work as he is the current title holder anyway and is willing to relinquish his hold on the title just to release both lawsuits.  It appears they will not accept that.  I am not sure how I can get the 2nd to provide a notarized copy of a letter like that.  Only lien I have not handled (provided a notarized letter for) is the 2nd mortgage of around $85k.

This is normal for FHA short sales.  I got Regions to issue a lien release for a $100K 2nd HELOC on a FHA short sale for the $1,500.  You will have to fight the catch 22 issue, which is that Wells 2nd will keep telling you that they need a HUD1 and an approval from Wells 1st showing what they will get before they can process the short sale.  Of course Wells 1st will not issue an approval letter because they want the lien release.  Unfortunately, the lower level rep at Wells 2nd has no clue.  Therefore, you will need to escalate at Wells 2nd and send them a preliminary HUD1 showing what they will get (you already know the amount because the FHA program is non-negotiable) and provide them with HUD Mortgage Letter 2008-43 and other FHA/HUD PFS documents (http://www.endingforeclosures.com/short-sale-documents#HUD) and note the section on title and junior liens.  Push it and see where you go.

Hmmm...this is exactly what we submitted with the liens in question on it and it was fine. Weird.

Ok I see this here. and see what it says. However, in my case the judgement is against the homeower, however under Missouri law the transcription was not filed with the Clerk of the Circuit Court and therefore can not be a lien against real estate.

"A judgment rendered by the Associate Circuit Court may become a lien on a judgment debtor's real property only if a transcript of the judgment is filed with the Clerk of the Circuit Court.  (Section 511.350(2).)This judgement was NOT filed with the clerk of the  Circuit Court and is not a lien on the real estate. Title Company is insuring the property and I have communicated with the Title company and the above is their statement and they will stand behind insuring the Title.

How do I get Wells Fargo to recognize State Law? So far they are refusing since there title report from First American shows the judgement. 

Wells is cancelling the file.

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