Did I Wake A Sleeping Giant?

[Ibrahim Hughes]

I’m purchasing a property that previously had a $275k mortgage against it and went into foreclosure. The seller purchased at the top of the market and fell into foreclosure on a property that barely, if ever, cash flowed. At some point the mortgage was sold a couple of times and ended up at Green Tree. But not before it was discharged completely, presumably due to a fire. I assume the lender had property insurance.

So by the time I reach the seller the mortgage had been discharge. I notified him of the discharge and since he had long walked away from the property he was willing to sell at a discount. We got under contract for a price that works for both of us (we haven’t closed yet).

But when title came back showing open judgments from previous sellers/owners (who had the same common name as the debtors) the current seller was unable to find his old title policy indemnifying him and the property against said judgments.

So I contact Green Tree to see if they would give us a copy of the policy. For some reason, the loan was automatically forwarded to their collections dept. The collection rep claimed that they still had the loan showing up as open (claimed they didn't have a copy of the title policy, btw). I assured her it was discharged but then realized that I had better end the conversation before I open up a can worms I have trouble closing. That was about a month ago and I didn’t hear anything from her until a couple of days ago leaving me a message to give her a call.

I have a ‘discharge of mortgage’ that clearly states that the lender has received “full payment and satisfaction” of the mortgage.

Do I have anything to worry about here in your opinion? The open judgment issue has been resolved, btw.