HELOC not a lien on the title

[stboerma]

What is the name of your state? California

Hello.

I refinance my house into a 1st, 2nd, and 3rd all with the same lender (Wells Fargo).

Due to the housing slowdown, my house is worth about $10,000 less than these mortgages combined.

In addition, one of the older HELOCS that I refinanced (from E*trade) remained open and, as a bad choice, I tapped into that. This is now about $250,000 for the original HELOC.

So, I have a 1st, 2nd, and 3rd with Wells Farge plus the old HELOC with E*trade which is putting me around $260,000 underwater.

However... the HELOC with E*trade that was refinanced is not listed as a lien on the property. I did a title search back in Aug 2007 and it showed only the new 1st, 2nd, and 3rd loans, not the old HELOC.

If I were to try and sell my house, what are the chances E*trade would add themselves as a lien against the property.

If they do that, then that would make my short sale more difficult and I may face foreclosure. However, if E*trade cannot add themselves as a lien, then the short sale would be much easier, I believe.

After all that rambling, I am wondering if anyone has any advice for me as far as the likelihood of E*trade getting added to the title, short selling, etc.

Thank you!

--SteveWhat is the name of your state?

[FlyingRon]

The HELOC is free to record a lien at any time. They're only hurting their "priority" by not doing so immediately. Since HELOC's often sit unfunded (you haven't borrowed against the line) they typically don't get recorded until that happens.

If you did the title search yourself, it's quite possible that you just missed it. Sometimes the computer indexes don't get all the liens. That's why it always behooves you to use a professoinal who will issue a policy warranting the results of his search.

[nextwife]

Regardless of whether it was properly recorded, misposted in the register of deeds office or not, YOU still are liable for the debt.

[stboerma]

Originally Posted by FlyingRon

The HELOC is free to record a lien at any time. They're only hurting their "priority" by not doing so immediately. Since HELOC's often sit unfunded (you haven't borrowed against the line) they typically don't get recorded until that happens.

If you did the title search yourself, it's quite possible that you just missed it. Sometimes the computer indexes don't get all the liens. That's why it always behooves you to use a professoinal who will issue a policy warranting the results of his search.

Actually, I used [url]www.titlesearch.com[/url]. I used their "platinum full property" search where they say they do an in-person search and lists the Liens, Judgments, etc. As of August 2007, the E*trade HELOC was not on there. I am thinking of doing another search now to see if anything has changed.

Thank you.

--Steve

[stboerma]

[quote=nextwife;1900877]Regardless of whether it was properly recorded, misposted in the register of deeds office or not, YOU still are liable for the debt.[/QUOTE$]

Well, I guess the safest thing to do if I'm trying to do a short sale is let my Realtor know about the HELOC and see what he can do with it added on.

The 3 Wells Fargo loans (1st, 2nd, and 3rd loans) add up to just about how much the property is worth. Actually, about $10K-$30K below, so if I did a short sale, I'm assuming the E*trade HELOC would essentially have to agree to write off the loan? I'm sure they wouldn't like to do that, so my Short Sale wouldn't get approved? If that is the case, then my only other option is foreclosure which, when it happens, would only pay the 3 Wells Fargo loans w/ nothing left over for the E*trade HELOC.

Is this correct?

--Steve

[nextwife]

You may be surprised. My bet is that the HELOC is still of record, still open, and has priority over the liens that were recorded "behind" it. If you agreed in your refi closing papers to close the line, and yet you used it - to the tune of $240,000!- anyway, due to some clerk's negligence in closing the line, you may be CRIMINALLY liable. You were well aware that line was paid off in the refi and intended closed.

Lucy, you got some 'splaining to do!

[stboerma]

Originally Posted by nextwife

You may be surprised. My bet is that the HELOC is still of record, still open, and has priority over the liens that were recorded "behind" it. If you agreed in your refi closing papers to close the line, and yet you used it - to the tune of $240,000!- anyway, due to some clerk's negligence in closing the line, you may be CRIMINALLY liable. You were well aware that line was paid off in the refi and intended closed.

Lucy, you got some 'splaining to do!

Hmm... interesting. But I'm confused why my title search in August of 2007 didn't show the HELOC ? By that time, I had used it.

I suppose what I need to do is possibly do another professional title search, look over my refi papers, and consult an attorney in my area on where I stand and what might occur in my situation in case of a foreclosure.

--Steve

[nextwife]

If the HELOC was "misposted", or recorded in the wrong county has NO BEARING on your liability for use of the loan. You seem to think that it (the HELOC) only counts if there was no error in the recording process.

It is VERY likely that YOU AGREED in your refi closing docs for this loan to be CLOSED. You therefore KNEW the new loan was conditioned on the HELOC going away and not being used. Whatever title company insured the loans that came after can, and likely WILL pursue you legally if your shenanagans create a title claim. An underwriter, such as CTIC, First Am or Land Am, for example, has TREMENDOUS legal resources available to them. This is NOT merely a short sale, or even a foreclosure question. You knowingly and fraudulantly used resources that no longer, in essence, belonged to you. TRust me, this is going to be ugly, with different lenders fighting to assert priority of their claims, and their respective legal departments then turning to the title company. They may pay the claim, so as not to mess with a good customer, then turn around and use their legal recourse against you. What did you assert in the owner's affidavit that you signed at closing?

[FlyingRon]

Titlesearch.com isn't necessary conclusive. It's just a site that mines the accessible records. As I said, I've found deeds and encumberances misindexed at the county and the online searches that look only by one dimension do not find them. You need to search by grantor/grantee name, address, tax map #, etc... to make sure you've found everything.
To be valid it just needs to be recorded "in the book" it doesn't mean that the online indexes mean anything.

If they were going to stand behind their research, you'd have the option to get title insurance as a basis of their search.

[stboerma]

Originally Posted by nextwife

If the HELOC was "misposted", or recorded in the wrong county has NO BEARING on your liability for use of the loan. You seem to think that it (the HELOC) only counts if there was no error in the recording process.

It is VERY likely that YOU AGREED in your refi closing docs for this loan to be CLOSED. You therefore KNEW the new loan was conditioned on the HELOC going away and not being used. Whatever title company insured the loans that came after can, and likely WILL pursue you legally if your shenanagans create a title claim. An underwriter, such as CTIC, First Am or Land Am, for example, has TREMENDOUS legal resources available to them. This is NOT merely a short sale, or even a foreclosure question. You knowingly and fraudulantly used resources that no longer, in essence, belonged to you. TRust me, this is going to be ugly, with different lenders fighting to assert priority of their claims, and their respective legal departments then turning to the title company. They may pay the claim, so as not to mess with a good customer, then turn around and use their legal recourse against you. What did you assert in the owner's affidavit that you signed at closing?

What you say makes a lot of sense and is giving me second thoughts on how to handle this. I'm going to look at my closing papers and see what I signed and look for an agreement for me to close the HELOC. Maybe I can scrape out another couple of years in my house and "hope" for the real estate market to turn around and start rising again. In the meantime, pay extra on the HELOC and pay down as much as I can. This will be very tough, but I think I might be able to pull it off. If I can't, then I will have to live with the consequenses.

Thank you,

--Steve

[stboerma]

Originally Posted by FlyingRon

Titlesearch.com isn't necessary conclusive. It's just a site that mines the accessible records. As I said, I've found deeds and encumberances misindexed at the county and the online searches that look only by one dimension do not find them. You need to search by grantor/grantee name, address, tax map #, etc... to make sure you've found everything.
To be valid it just needs to be recorded "in the book" it doesn't mean that the online indexes mean anything.

If they were going to stand behind their research, you'd have the option to get title insurance as a basis of their search.

Do you have any suggestions on an online (or offline) resource to use that provides title insurance? Would a title company do this for me even if I'm not currently selling the house? If, as was previously posted, the HELOC does have a legal right to the first spot, but the other lender thinks that they also do, then this can get very hairy and I should focus on paying down at least what I own with all loans combined to the property's current value.

Thank you!

--Steve.

[FlyingRon]

Look in the yellow pages (online or otherwise) under TITLE in the jurisidiction you are interested in. Anybody can do a search. You won't get the insurance unless you acquire an interest in the property.