Surprise partial claim at closing!

Welcome to the LoanSafe Forums!
Get free mortgage help today. Since 2007, the LoanSafe forums have helped millions of homeowners over the last 13 years either save their homes with a loan modification, obtain a short sale, forbearance, or walk away legally from their underwater mortgages.
Register for FREE

Mjos

LoanSafe Member
Jan 6, 2021
2
0
1
Has anyone here been able to get a partial claim extinguished?
My story:
Bought my house in 2011 . In 2013 we started to face financial problems and we took out a modification which ended up being a partial claim/modification combo. $103k was placed into a 2nd lien. (I didn’t realize this at the time. I was young and wanted to keep my home)
Fast forward today, the day before closing the title agent runs the title and finds 2nd loan. I am shocked. I thought I was making $100k on the sale and now I’m left with nothing. I have to pay $10k to close.
I should mention during this time I divorced. I kept the house and it was granted to me in divorce with only principal balance disclosed. Not the 2nd loan. It’s a no interest so I have not received statements as the maturity date is 2043 or when I sell. I am at a loss. No one can help. Does anyone have advice or similar situation where they were able to reduce the partial claim amount? I am supposed to now close and can’t back out of contract and I feel like everything I ever worked for is just gone.
 

Jzone

LoanSafe Member
Jun 20, 2017
230
31
28
71
Has anyone here been able to get a partial claim extinguished?
My story:
Bought my house in 2011 . In 2013 we started to face financial problems and we took out a modification which ended up being a partial claim/modification combo. $103k was placed into a 2nd lien. (I didn’t realize this at the time. I was young and wanted to keep my home)
Fast forward today, the day before closing the title agent runs the title and finds 2nd loan. I am shocked. I thought I was making $100k on the sale and now I’m left with nothing. I have to pay $10k to close.
I should mention during this time I divorced. I kept the house and it was granted to me in divorce with only principal balance disclosed. Not the 2nd loan. It’s a no interest so I have not received statements as the maturity date is 2043 or when I sell. I am at a loss. No one can help. Does anyone have advice or similar situation where they were able to reduce the partial claim amount? I am supposed to now close and can’t back out of contract and I feel like everything I ever worked for is just gone.
....the price you pay for being young.
Did you think this $103K was just being forgiven? I'm not sure what can be done, if anything at this point.
I would at least check your divorce records and see if your former spouse has any financial obligations to the debt. Doubtful but worth a try.
 

Mjos

LoanSafe Member
Jan 6, 2021
2
0
1
No I would never think it was forgiven. I thought it was somehow rolled into my total payoff. I clearly didn’t understand what I was signing.
 

Jzone

LoanSafe Member
Jun 20, 2017
230
31
28
71
I'm still not sure what you signed. You say the "$103k was placed into a 2nd lien". But you also say its a 2nd loan with no interest and no statements but has a maturity date of 2043 or when you sell? Check your modification documents to see exactly what you signed. Sounds like you signed a second mortgage.

So you continued to make payments on your first mortgage, but never made any payments to reduce this lien balance?

The only thing I can think of is that when you did the "partial claim/modification combo" it was actually a second mortgage and your bank created a lien on the property, with no payments due but they would eventually get their money when you sold.

Have you checked your county register of deeds to see who the actual lien holder is. Someone is waiting to collect that $103,000. There must be enough equity in your home to pay off the balance of the first mortgage? That releases the first lien. Then it sounds like you are $10,000 short of releasing the second lien. When you sell, the buyers bank will want a clear title to the property and wont go forward with the closing if that second lien is still not settled.