Profile picture for MarshaBegley Lynn

Can a hidden second mortgage stop the sale of my house ?

 When I bought my house , I was not aware that there was a second mortgage on this home , never saw any paper work on this. Now, went to sell my house, it appears. I never signed for any other mortgage except the one that was current when I bought the home. So, Who is Liable for this second Mortgage and does it keep me from selling my home ?
  • March 03 2011 - US
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Answers (10)

I'm surprised no one who has answered this question picked up on your statement "I never signed for any other mortgage except the one that was current when I bought the home"

Did you purchase the home "subject to" the existing loan or on a contract of sale?

Did you or the seller purchase a title policy at the time of closing? If you did then you have recourse against the title company.

If you did not, you may have just learned the biggest lesson of your life.

Please let us know a few more details of your purchase.
  • August 11 2012
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Profile picture for sunnyview
I don't think so. When you take out a mortgage second or otherwise, anyone who has their name on the title has to sign the new paperwork.
  • August 11 2012
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Profile picture for Bee47
Is it possible for a spouse to take out a second mortgage secretly?
  • August 11 2012
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Profile picture for blue screen exile
As already mentioned, your title insurance company is the one to call first.  But without knowing the date if the lien, it is not at all clear what it is nor why it is there.

It could be a "mechanics lien" and you don't need to sign anything to be responsible for that.  If a contractor did work on the property and you didn't pay, it is extremely easy for them to place a lien on the property.  Similarly, a city can place a lien on the property for service or for work performed, such as sidewalk improvements in the street right of way in front of the house.  When the city issues a code violation for not trimming the yard or something and you don't fix the problem, and you don't pay the citation on time, not only do you get a lien for the citation, but the city will often fix the problem (mow the yard...) and charge you for it, and when you don't pay, it goes on a lien against the property.

You also can contact your county records office and ask them for a copy of your documents and all liens against the property.
  • March 03 2011
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A couple of items to consider.  When there is a "cloud" on title, the Title Insurance company has responsibility for researching and assisting you in cleaning this up.  It could also be that there was no, "Deed of Reconveyence" issued on the second, and that the lien has been paid off. This can get sticky, but there is remedy, again with the title company.  I agree with the other agents that you remedy is through Title Copmpany.  I am surprised that a recorded lien was transferred to you. 
  • March 03 2011
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It's possible that there was a 2nd mortgage on the property that was satisfied when the property was sold to you, but the satisfaction was improperly filed.

I have a client that is buying a home where title was showing that the owner previous to the current owner had not been paid. This turned out to be an error on the part of the title company and they have since corrected the error.

If there is indeed a 2nd mortgage that you know nothing about and was in effect prior to your buying the home, this should've been caught in a title search. Therefore it's the title companies responsibility to make the correction.

And THIS is why you ALWAYS buy title insurance.

And no, you can't sell the home with a 'cloud on title' as the buyers title company won't indemnify the title (they wouldn't be able to get title insurance which is required by the bank).
  • March 03 2011
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Hidden mortgages only hinder sales when they become "found" as you have at this point in time.  

Crazier and stranger things have happened but sometimes the person that you bought from didn't have their second mortgage recorded properly  and you can get this fixed but have the attorney/title folks get digging to see when the second mortgage originated.

Keep us posted!
  • March 03 2011
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If this 2nd mortgage was taken out before you purchased the home, the title company who issued the title insurance should be responsible for it. It is their job to make sure that the title of the home you are purchasing is free of any leins except the new mortgage that you take out to purchase the home. If this loan was taken out in your name, after you purchased the home and you have no knowledge of it, well... that sounds like fraud to me... Either way, I would contact the lawyer who handled your purchase transaction and see what he or she says.

Good Luck!
  • March 03 2011
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looks like title insurance should be to the rescue as well! Yikes talk to a real estate attorney ASAP
  • March 03 2011
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Whose name is the mortgage in? You really should take this matter up with your attorney. A lien should be removed before any sale takes place.

Good luck!
  • March 03 2011
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