Partial Claim & Refinancing

[TwoWheelRyder]

I am in the process of refinancing our FHA loan and ran into an issue concerning a partial claim that was made many years ago.

Several years ago my wife had me sign a partial claim agreement to get us caught up on our mortgage (she had made some mistakes with respect to our finances that put us behind). I thought the paperwork that she had me sign was for something else at the time but had not understood what it was for. I recall having made double mortgage payments about 3 months in a row to catch up back then so I thought we were all caught up and was not aware of this loan.

About 2 weeks ago she finds the paperwork of this partial claim (she had even forgot about) and so I called the current mortgage company's loss mitigation dept to determine if they have record of this and verify the amount. They tell me that the loan is current (which it has been for more than a couple years) and there is no record of any partial claim. I spoke with several other departments of this company and none of them can find any record of this. The title search of the company doing the refinance does not see any lien other than the current mortgage company. Our credit reports do not show any other loan (second loan etc).

According to HUD it is the Mortgagee's responsibility to inform them when the first mortgage is paid off or the property has been sold etc.

If the company has no record of the partial claim and there is no lien how will HUD collect on the subordinate note? How will they ever know?

I myself would not have known unless the wife had not found the old paperwork.
If I had not found this out and refinanced or sold the property who would be responsible?
My guess is me but what about the mortgage company? Can they be held liable?

If HUD found out that the property was sold or refinanced would they have still demanded full payment from me in light of this mistake?

Any insight is appreciated.

[HomeGuru]

**A:

Originally Posted by TwoWheelRyder

I am in the process of refinancing our FHA loan and ran into an issue concerning a partial claim that was made many years ago.

Several years ago my wife had me sign a partial claim agreement to get us caught up on our mortgage (she had made some mistakes with respect to our finances that put us behind). I thought the paperwork that she had me sign was for something else at the time but had not understood what it was for. I recall having made double mortgage payments about 3 months in a row to catch up back then so I thought we were all caught up and was not aware of this loan.

About 2 weeks ago she finds the paperwork of this partial claim (she had even forgot about) and so I called the current mortgage company's loss mitigation dept to determine if they have record of this and verify the amount. They tell me that the loan is current (which it has been for more than a couple years) and there is no record of any partial claim. I spoke with several other departments of this company and none of them can find any record of this. The title search of the company doing the refinance does not see any lien other than the current mortgage company. Our credit reports do not show any other loan (second loan etc).

According to HUD it is the Mortgagee's responsibility to inform them when the first mortgage is paid off or the property has been sold etc.

If the company has no record of the partial claim and there is no lien how will HUD collect on the subordinate note? How will they ever know?

I myself would not have known unless the wife had not found the old paperwork.
If I had not found this out and refinanced or sold the property who would be responsible?
My guess is me but what about the mortgage company? Can they be held liable?

If HUD found out that the property was sold or refinanced would they have still demanded full payment from me in light of this mistake?

Any insight is appreciated.

**A: does the current title report list this claim as a mortgage or some other reference.

[TwoWheelRyder]

Originally Posted by HomeGuru

**A:



**A: does the current title report list this claim as a mortgage or some other reference.

I have not seen the title report yet and the agent doing the refinance is having the title search company rechecking. The results should be back today.

[HUD-1]

HG is right on. The lender is responsible for recording a subordinate mortgage on a Partial Claim. If it shows up on the title search, it will have to be satisfied or subordinated upon a refinance.

[TwoWheelRyder]

Originally Posted by HUD-1

HG is right on. The lender is responsible for recording a subordinate mortgage on a Partial Claim. If it shows up on the title search, it will have to be satisfied or subordinated upon a refinance.

As stated earlier the title search is researching this further. The only thing that the title search revealed to this point was a second lien by the company that had the loan before the current lender. I called the current lender to get the details and they confirmed that the lien should have been released. This is not a lien for the partial claim however the title search is still underway and they still could find something.

The question is what if the title search is completed and they don't find any other issues and HUD says a partial claim was made by the current lender?

Could it be that the lender lost the documents and HUD is correct? If so, why did HUD not place a lien on the property as is supposedly part of this process?