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?

Comments(3)

  • cjmazur10th November, 2007

    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.

  • LeaseOptionKing10th November, 2007

    With an 80/20, the same lender typically does both loans, so they will know about the error upon sale.
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  • LeaseOptionKing11th December, 2007

    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]

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