Clear Title, or not?

[blue_prairie]

What is the name of your state? South Dakota.

Two years ago my husband and I purchased a house. The sellers were facing forclosure, which they did not tell us about when we made our offer. (Un)fortunately things worked out so that we were able to buy the property. We did not go through a realtor but had an attorney and banker involved; both knew the situation. We also went through our state's first-time homeowners program. At the time of closing the title was found to be clear and everything was fine...or so we thought.

This summer we purchased some additional land and decided to refinance it all into one mortgage and also get away from the first-time homeowners agreement. The problem is, apparently, that the title is no longer clear. We are being told that someone did not finish filing paperwork properly with the bank the old owners had their mortgage at. We do have title insurance, but I don't quite understand what I'm supposed to do. We have been working with our banker for two months trying to get this straightened out. The latest news we've had is that the seller's bank didn't recieve the payoff amount from the sellers. We closed at the title and abstract company with our banker, the sellers, and their bank's representative present, so I don't understand what or how this has happened.

Any ideas or advice would be GREATLY appreciated...I want to get this over with and know I'm making payments on something I own!

[nextwife]

Did you ever recieve a FINAL policy? Did the lender recieve theirs? IS the sellers mortgage still shown as open on the final?

Whomever the disbursing agent is failed to get the payoff done. I would suggest getting back to them. Likely they were doing an "insured closing" (all the mortgage lenders I know REQUIRE the disbursing agent to provide and "insureds closing letter" from their underwriter) and have liability. They need to get to their file and see if the payoff check was cashed and by whom and where it was sent, and so on. But they would be the place to start. Closing agents have responsibility when they send mortgage payoffs. It is ALSO possible the payoff was misapplied internally once recieved, so having copies of any cancelled payoff check is where to start.