Note holder won't respond

9 Replies

Hello everyone,

I am trying to purchase this property but I'm having a hard time clearing the title. Apparently the 1st mortgage has not been serviced in 5 years or more and no moves have been made to foreclose either. There are about 20K of back taxes and other city violations to be paid. 

I contacted the note holder of record and told them I am purchasing the property and would like to pay off the note. The asset manager seemed not to have enough information on the property and told me she would call me back but I haven't heard back from her. I tried calling her a few times and I left voice messages but she has not responded. 

The owner of the property (the one I'm purchasing the property from) is not the original borrower. He got ownership of the property via Quitclaim deed and he claims to not have been aware that this mortgage even existed. So I was the one who had to track down the note holder and get in touch with them.

Anyway, the property has been abandoned for a long time and if I can get this lien cleared up for a reasonable amount this can be a killer deal. However, the note holder of record seems to have fallen off the radar. I suspect they don't have all the documents for this note since this mortgage was assigned to them after having been assigned many times over the years. 

Any suggestions???

Thanks

@Mark Matos

Take my advice with a grain of salt, I'm no expert but here is what I would do.

If its a good deal even with paying off the lien why not take title subject to the lien...  in the event they wake up and decide to foreclose you could then pay off the loan or re-finance.

It's a risk that at least you know about going in and can decide if its worth the risk.

There is always the possibility that they will not foreclose and then you will have to deal with this lien again when/if you decide to sell the property in the future.

You may try skip trace or something to exhaust all possibilities of contacting the lender...  

Jeff V

@Mark Matos

If you really want a payoff (see @Jeff V. note), send a written request to the lender and provide a fax number or email address for the written payoff statement. Lenders are obligated to provide payoffs and to release liens within certain timeframes. They are not going to do so via voicemail/phone -- and hopefully they won't require borrower's authorization from you, but be prepared to address that requirement. Good luck.

Thanks for the respons gentlemen.

Im debating purchasing the property subject to the mortgage. I will bring my lawyer into this one before I make a move tho.

Thanks again

@Mark Matos   If your numbers are good for your purposes and it makes sense to buy, I would lock it up with a purchase contract with your seller and open up escrow with your closing attorney. I know that in GA title insurance is optional and generally paid for by the buyer. I highly suggest getting title insurance in almost all cases. Get the title company started right away on what needs to be done regarding your title issues. Let them do the investigative work. They will tell you what they will insure and what they won't. Instead of speculating you can get concrete information and make better decisions. Taking this property subject to seems risky to me without knowing what you're dealing with. You might find out that your seller doesn't have a legal right to sell the property. You might find out that the lender's liens may be unenforceable and that you won't have to pay them off. Who knows what you might find but start with a title company to help you out.

Thanks @Andreas Mirza 

That is exactly what I did today. It is under contract and my title company is now handling it.

I have a strong feeling that this note is unenforceable. But if that is the case, how can I clear the title from it?

Would title insurance be enough? My goal is to sell this property.

@Mark Matos I had a similar situation about 5 years ago and I forgot the proper terminology but the concepts may apply to you.

We were in contract to buy a condo from a woman who had lived there for at least 30 years. There was an old loan from 1985 that showed on title for about $2500. We assumed that it had been paid off but never reconveyed. Our title company advised us that there are companies out there that will insure that particular event. The company will do its own investigation and make an offer to insure against any particular problems that might come up. For our situation, the title insurance company would insure everything except for that old lien. Another company would insure against that lien giving us completely clear title.

The buyer eventually got a hold of the old lien holder in Alaska, paid them some money, and had the lien removed the normal way so we never had to go the other route.

I would suggest you deal directly with the title insurance company from the beginning so that you can get everything taken care of when you're buying the property. That way it will already be taken care of when it comes times to sell. Retail buyers will stay away from title defects hindering your ability to sell.

Originally posted by @Mark Matos :

Thanks @Andreas Mirza 

That is exactly what I did today. It is under contract and my title company is now handling it.

I have a strong feeling that this note is unenforceable. But if that is the case, how can I clear the title from it?

Would title insurance be enough? My goal is to sell this property.

The mortgage (the one that isn't being paid and for which payment is apparently not being pursued by the lender) has a maturity date written on its face. Depending on where the property is located, that mortgage will not expire until X years after the maturity date. Any time before that date the lender, or a successor in interest, can foreclose on the property. Whatever sums they are due under the note will be payable in full, regardless of whether or not they have been trying to get paid.

Some creditors buy old debt -- such as private mortgages which the borrower stopped paying years ago -- for pennies on the dollar. Every once in a while the creditor scores a home run.

If nobody can confirm that this debt is paid then no reasonable title company is going to insure the transfer without an exception to the trust (or an affidavit and indemnity from the seller -- not likely in this case)... and no lender is likely to lend money on the acquisition if they aren't going to be in first lien position.

@Tom Gimer Thanks for the feedback.

I was a little concerned that the note holder would pursue a foreclosure, but that seems unlikely. First of all, the lender has absolutely no documentation to show how much is currently owed on the note. Second, when the current holder purchased this note it failed to inform the borrower of its contact information and how to pay the debt. On top of that, I highly doubt that the note holder has the original documents of the note. For those reasons, a foreclosure could be contested and would not be in the best interest of the note holder. 

What I am hoping is that we will strike an agreement that will be favorable to both parties.

I don't think the Title company will insure the title without clearing this note. However, I do hope that they will help me negotiate with the note holder. After all, the note holder cannot simply ignore the request to pay off the note, they must give the borrower the chance to pay it off before foreclosing.

@Mark Matos The best course of action like you've stated is coming to an agreement with the lender if you can locate him.

If you cannot locate the lender despite your best efforts, you might have to go to court and do a Quiet Title action and have the judge remove the lien. He might require that you attempt notification to the lender via publication.

I was curious so I looked up my past transaction, which was in California. We were set to get a "Lost Note and Deed of Trust Bond," a recordable document. The Bonding company indemnifies the title company if there is ever a claim from the lender who cannot be located. With this indemnity, our title company was going to insure title. It's for the situation where you absolutely cannot find the lender and you don't want to go through the court system. I don't know if this will work in GA.

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