Unrecorded second mortgage ??

[Sean Thompson]

I have a client who pulled a second mortgage a few years back. But the bank did not record the lien with the county, or city or whoever handles that. The bank claims that since it was not recorded with the county, they consider it a "unsecured" second mortgage. A year after getting the second mortgage, the bank sold it to another bank. She has been paying on the loan in order to not get in trouble, but now she is attempting to sell her home, and is wondering what will happen with it. Does the loan still exist even if it's not a lien against the property? I think it would still be a loan to her personally, but not a lien against the property. But to make sure , I would like all of your opinions. Does the loan actually exist ? Is it attached to the house? Will it affect the selling of the house? Will it hurt her if she stops paying on it ? Thank you for all of your inputs on this. Sean thompson Owner inopii holdings llc Inopiiholdings.com

[Chris Seveney]

Sean Thompson there is a difference between a note and a mortgage. The note is a promise to pay back a loan based on specific terms. The mortgage secures the note to the property

So yes they still owe the money but if the mortgage is not recorded it is not secured. If the house sells - ask an attorney but they may technically not have to pay off the loan and could keep the cash and continue to pay down the note if they wanted to. That would be a question for an attorney