Tax Liens, Notes, Paper, and Cash Flow Discussions

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Ben Taub
  • Essex County NJ
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Problem with getting a payoff from second Lean holder

Ben Taub
  • Essex County NJ
Posted Dec 14 2021, 13:40

i went into contract on a short sale property in Essex County NJ.

everything looked fine until we found out that there is a second note on the property originated by BOA 

We have reached out to Bank of America to inquire about this lien, and they informed us that servicing of the mortgage was transferred to Fay Servicing back in 2015. We have also contacted Fay Servicing who told us that the loan was purged off their system back in 2018 and we needed to speak with their lien release dept about getting the lien released from title. Unfortunately, I have not been able to reach anyone in the lien release dept at Fay and have not gotten an answer from them if they are going to be releasing the lien from title or if they are going to require a payoff in order to do so.
I do not have any loan number or additional account information from Fay and when we call their customer service dept, they tell us they have no record of the loan in their system. But the consumer advocacy team has confirmed that they located the loan and It was purged in 2018 which is why customer service cannot see It. The last thing they told us is they would submit a research request to the lien release dept to look into this matter… but it's been over a month since they said that, and we have not heard anything and they are no longer responding to my emails.

i was told to do a Quiet Title however my attorney told me that a  QT is only in the situation where we are sure that it was paid off and have proof for that , however in this case the seller doesn't remember that was paid off, but most likely it was purged since they just stopped to collecting it .so he can't see how we can file for a QT.

can Anyone advise on this? is there really nothing you can do if a lender is unresponsive???!!!

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Chris Seveney#1 Tax Liens, Notes, Paper, and Cash Flow Discussions Contributor
  • Investor
  • Northern Virginia
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Chris Seveney#1 Tax Liens, Notes, Paper, and Cash Flow Discussions Contributor
  • Investor
  • Northern Virginia
Replied Dec 14 2021, 14:17

@Ben Taub

The lender most likely wrote off the loan - meaning that it wasn’t paid off but they are no longer collecting it. But in same token the money is still due as long as it has not exceeded the statute of limitations.

How to get this resolved - good question as Fay removed it from servicing so it is no longer being serviced.

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Chad U.#4 Foreclosures Contributor
  • Investor
  • Boca Raton, FL
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Chad U.#4 Foreclosures Contributor
  • Investor
  • Boca Raton, FL
Replied Dec 15 2021, 06:04

I'm surprised that a short sale was granted by the lender on the 2nd position, obviously the realtor did not get their permission.

Servicers are useless. You might have some luck by researching the county records, and track down who the last assignee of the loan was. Then try contacting someone Within that lender to determine what their intentions are with that loan.

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Andy Mirza
  • Lender
  • Ladera Ranch, CA
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Andy Mirza
  • Lender
  • Ladera Ranch, CA
Replied Dec 15 2021, 06:39

@Ben Taub To me, it's not entirely clear what "purged from their system" means. As Chris said, it might be charged off and they're no longer collecting on it. I suspect, as Chad implies, that maybe the loan was sold off to someone else.

You can get an O&E report from ProTitle for about a hundred bucks that will show recorded docs against the property. You should be able to see who the last Assignee is from the last recorded Assignment of Mortgage. This would be the current lender and the one you need to deal with. If B of A sold this loan to someone else, you might be talking to the wrong servicer. 

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Minna Reid
  • Real Estate Broker
  • Jacksonville FL & Woodbridge CT
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Minna Reid
  • Real Estate Broker
  • Jacksonville FL & Woodbridge CT
Replied Dec 15 2021, 10:56

Second loans get bought by collectors after charge off (what I assume you mean by purged). Someone own this note and probably paid very little for it. They are usually eager to get paid off them. You need to find out who it is and work the short sale with them. Often, the customer has received documents from them, and if not the info you need will be on title as @Andy Mirza mentioned.

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Ben Taub
  • Essex County NJ
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Ben Taub
  • Essex County NJ
Replied Dec 28 2021, 13:58

i end up finding another attorney that told me that this is exactly where a Quit title would came in ,to eithr get the lien relesed or to get a payoff . however we are already running out of time , instead i just hired him to write a letter threating to sue Fay for being unresponsive etc.

what Minna mentioned, that i must find out who is the real Note Holder, this is exactly the problem we are facing, that the only Lien we See is that it was with Fay back in 2018, but since than it was Purged off............but no idea who to ask a payoff from..........

Thanks for all of you for your help!

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Replied Jan 28 2022, 00:03

The prior servicer is only required to retain their records for a few years. Additionally, if the prior lender or servicer was acquired by another company, the servicing records for the lien which was previously transferred would likely have been purged from their system.

Submitting a request for a payoff is not likely to result in a response as they do not likely to receive a response. If you are not contacting the correct servicer, they are not obligated to assist further. Checking title, with the county recorder, will reveal if constructive notice has been fulfilled by Assignments of Mortgage being recorded. If there are no additional documents recorded, the most appropriate course of action, as you were correctly advised, would be to file a Quiet Title Action. This is appropriate when there is evidence that the lien has been paid off but also when the lien holder is not responsive. 

Another option is to check the MIN number, if applicable, which should reveal  the last registered servicer. Calling them should direct you to the appropriate servicer or to the next lien holder in line. Escrow companies deal with this issue every day, it can be overcome.