It is Risen! Lender resurrects released mortgage, halting my deal

[Matt Schelberg]

I've been working on a purchase that's been under-contract for 12+ months:  negotiating with lienholders, opening probate, etc.  We are close to the finish line and a mortgage company has decided to get sneaky and it is threatening to kill the deal.  What can I do?

The mortgage company has decided to issue a payoff statement for a mortgage they released several years ago.  The release is recorded in the land records. The title company requested the payoff because they initially didn't see the release.   The mortgage company replied that $60K is owed and they won't communicate further.  Not knowing any better, the personal representative of the estate included that same payoff statement with the probate documents, so it looks like he is acknowledging the debt.

Now the title insurance underwriter is saying that despite the mortgage release, we can't close because the lender and personal representative have both made statements that the mortgage is still active.  Now we can't close unless the lender acknowledges that it is released...which they refuse to do...they wrote it off as a loss a couple years ago and are now trying to resurrect the mortgage to get paid.  

What can I do to resolve this title issue?  Can a lender really resurrect a released mortgage?

[Tom Gimer]

Something is not right here. If the lien is released, there is no title isssue. There is nothing to foreclose. It doesn't matter if the debt still exists... if it is not attached to the subject real estate, the payoff is irrelevant.