Lender signed a release of mortgage, it wasn't properly notarized, and is refusing to sign a new one

[Dustin Long]

I had received notice that a financier had been sued 4 years prior to me even meeting him and that I was going to have to pay the lawsuit on his behalf. It was only around $4,000, and I still owed him ~$30,000. The only way that I was tied into this was because of the filing with the county that he was holding a 2nd position, and I owed him money.

After speaking with 2nd position lender we agreed that he would release me from that 2nd mortgage, which would allow me to keep paying him and not the attorney that contacted me (which would spare him 14 months of receiving nothing from me and overall allow him to collect the full amount of his mortgage, not $4,000 less). This was also a benefit to me as I could then get new second position financing on the property and use the proceeds to further grow my business.

I did find more financing and provided my attorney's office and the lender a copy of the release of mortgage 4 days before closing and there were no issues,... Until after all funds were disbursed and the county didn't accept the notary's signature.

The original 2nd position lender is now about 45 days out from that closing, and refusing to sign a new document with no changes to it.

While I'm aware he's taking a risk by giving the release, he agreed to it and signed it.

What can I do? What should I do? I've looked for the notary but she's not on a 'list' where I can contact her, and she's unlisted. I did find her on Facebook but the message has been unanswered that I sent her 30+ days ago.

This whole ordeal is holding up a new acquisition because the lender for the new property has no security with his last financing due to the original 2nd's refusal to cooperate, and is costing me more time and money. I have several thousand tied up with deposits towards the new property and is leaving me next to broke, while when it goes through I'll be getting $20,000 cash out and can tackle my next 3 deals.