Monday, May 06, 2013

satisfying privately held mortgages....gotta watch it!

Hi Diane,

I was reading your blog and wondered if you could answer a question.  I purchased a townhouse in 2005 (in Maryland), and the owner held the mortgage.  In 2006 I refinanced, using the same title company I used in 2005.  In 2009 I again refinanced, using a 2nd title company.  I am in the process of refinancing and it has come to light that neither title companies cleared the lien when I refinanced in 2006 - it still shows that the owner has a lien although that was paid in 2006.  I purchased an owners title policy as well as a lender's policy when I bought the home in 2005.  Will this help me to clear the lien, and am I entitled to anything for the anxiety this is causing me (seems I should be able to recoup what I paid 2 title companies to do but which they didn’t do)?  My current refinance company suggested just getting the last owner to sign off, but she retired and moved out of Maryland 7 years ago – I have no idea where she is now.

Thank you for any information you can give me.


Hi, N:  Wow, crappy title agents in the two previous refinances!  You are in a pickle as the owner policy won't cover it.  I can only think of four courses of action.

1.  Hire an attorney to try to find the mortgagee - prior owner - and get her to sign a satisfaction.  With the internet, it is usually pretty easy to find people.  I like to use Super Pages "find people"  - it works pretty well is they have a land line.  Anyway, if the attorney can't find her, he can file a quiet title action to remove the mortgage.

2.  Discuss with your attorney options to sue the two title agents who missed the lien.  Even though title insurance doesn't cover it, their professional liability coverage may.

3.  Report both title agencies to the state insurance department and attorney general and CFPB.  They serve consumers and these entities will want to know that they aren't doing such a great job.  They may even compel them to help you.

4. Notify your current lender that they are NOT in first position.  They may put pressure on the last title insurance company to fix the problem.

I'm afraid your plans to refinance are on hold for now.  Good luck!


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