No Second Lien Recorded
What would happen on an 80/20 mortgage where the second lien is not recorded. If the owner sells a house and pays off the first lien can she pocket the proceeds, transfer title and continue to pay on time the second lien?
The owner of the 2nd has an unsecured loan.
Most likely, they will try to record it or claim that it was a clerical error and ask the borrower to resign docs.
With an 80/20, the same lender typically does both loans, so they will know about the error upon sale.
[addsig]
Yes, many lenders do seconds. But the petitioner is probably talking about a piggyback loan where the lender makes the 80 percent first at a low interest rate and then the 20 percent second at a high interest rate, and there is no PMI (although PMI is no longer as big a deal, since it is now deductible). If it is 80/20 financing (which is what it looks like is being asked about), that is done by one lender.
[addsig]