Possible to get title cleared?

Question

Before I waste money talking to an attorney just for them to say nothing can be done I thought I'd ask here in case someone has dealt with something similar. Listing shows "Property can only be conveyed by quitclaim deed, property has dead mortgage lender can not pursue foreclosure only note judgment on buyer." Anyone know a way to clear that? Or why an agent would bother listing it if not?

Account Closed · Answer

It's possible the title isn't clouded, or all that clouded. The mortage lender is not dead. If the lender that was assigned the note was able to get a judgment, they also have the power to release the lien. You say there is a satisfaction of mortgage? So what's the cloud? Ask a title company what they need, not a lawyer.

Rick H. · Answer

I suggest tying the property up under contract at a really low ball price point. Order title report from last company that insured prior transfer. Then, reverse engineer the deal. I say wait until this point to invest much time into this opportunity if you intend to acquire via conventional method, as opposed to going through the back door. Once under contract, prelim in hand and recognizing the title company's interpretation of the facts, move forward according to the tools you have and your tolerance for risk. If an involuntary judgment was obtained and the AJ recorded, it is a general lien on the debtor and not specific to this property.

Wayne Brooks · Answer

Scott, what state are you in? Generally, any recorded judgment attaches as a lien to any real estate owned, much like a mortgage, if not the same.

Scott Seaman · Answer

Update - "Dead mortgage lender" was a bank, killed off by FDIC with assets assigned to new bank and mortgage assignment recorded at the courthouse. Bank #2 took owners to civil court in May (not foreclosure), won $300k judgement - then filed a satisfaction of the mortgage in Aug. I can't imagine why they couldn't foreclose on the assigned mortgage but were able to get a civil judgement for the note or how that leaves the title clouded

Account Closed · Answer

I would ignore an agent's opinion about the status of title and foreclosure process. It appears the agent thinks the seller won't be able to clear the lien and is trying to sell the property subject-to it's existing note/mortgage. They are trying to sell without marketable title, so no title insurance. So they need a cash buyer. There are a ton of ways to deal with a lender that is deceased or no longer in business. In CA, title companies have several remedies available to them to release the lien and/or insure around it. There is also working with the estate of the deceased lender to buy the note or release the lien. What state is the property in? There are lot of variables. We can brainstorm here before you talk to an attorney.

Dion DePaoli · Answer

I agree with Wayne. The agent here may not fully be on point. The Mortgagee being dead (if they really mean deceased or out of business) doesn't affect the legality or enforcement of the Security Instrument (Mortgage/DOT) and Note. A "Note Judgement" which is not a technical term, seems to mean the borrower can only suffer from a Deficiency if one is pursued. That is not proper. A deficiency can only be identified once the Mortgagee can calculate the loss between what was owed and what was recovered from an action that resulted in loss, such as foreclosure or short sale. If the foreclosure doesn't take place, there is no way to have a deficiency because you don't have a number to use. In most states there are laws which dictate how much time a Mortgagee can take to respond to a payoff request. In addition, there are laws which dictate the time a lien must be satisfied upon receipt of the payoff amount. So if the Mortgage is being serviced by a Mortgage Servicing Company, there is a chance they can satisfy the lien. It will then become their issue of who to remit funds to for the payoff. This will depend on the Mortgage Servicing Contract to a large extent. Also, not resolving this issue certainly clouds title forever. So in that sense, a Quit Claim Deed is not really a work around. It probably makes this more of a mess. If the Mortgagee is private and dead, then I agree, there is either an heir or probate which can receive the payoff amount and execute the satisfaction of the mortgage. If the Mortgagee is a out of business lender, then there is an attorney or new Mortgagee which has taken control of the asset and can execute the Satisfaction. I would look into this a bit more, its not a dead end but will take a little bit of work to get it resolved. Resolving troubled liens on title is not new and happens all the time. Perhaps discuss with the Title Agent/Company/Attorney on the matter to get a better idea of the facts as the agent may not be fully versed in the matter.

Michaela G. · Answer

I would think that the dead lender has heirs and that there might be probate. Since the mortgage would be seen as an asset, I would think that that is something that would have been dealt with in probate proceeding, if there was one. Find out who the lender was and check if there was probate done. That's my suggestion. I'm not an attorney, so take this for what it's worth

Wayne Brooks · Answer

1) that would depend on your state law, and quiet title procedures 2) it doesn't make sense, just from the death of the mortgagee, that the note would be valid, but the mortgage isn't. The agent may not fully understand. It might be worth investigating, maybe not, question the listing agent for more details.