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Home Equity Loan – Beware of the lingering lien!
A problem that often arises when people try to refinance their home is
the discovery of a pre-existing lien from a previous loan that was not
removed by the lending company. The cost of removing a lien and returning
the title to the homeowner, a process known as reconveyance, is usually
included in fees associated with a home equity loan. When the loan is
paid off, the lender is generally responsible for removing the lien, so
that public records show the property to be unencumbered. There are
various reasons for why the lien isn’t always removed – oversight on the
part of the lender, especially during heavy periods of refinancing, is
often the problem. Occasionally, the problem can arise when a lender is
sold to another company or when that lender goes out of business. No
matter what the cause, a lien that hasn’t been removed can come back to
haunt a homeowner. If a homeowner is in the process of refinancing a home
and discovers an old lien that hasn’t been removed, the entire
refinancing process can be held up for weeks. This can be critical if the
owner is trying to lock in an interest rate prior to closing. The problem
can also arise when a homeowner is trying to take out another home equity
loan, perhaps to facilitate debt consolidation or home improvements. Here
are a few things you can do to avoid this problem: Get a copy of your
credit report. If there are any errors, particularly errors showing an
open line of credit or a home equity loan that has been paid off, contact
your lender. Keep your paperwork from all real estate loans, even if you
have already paid them off. Then you will have them at hand should you
need to demonstrate that you have fulfilled your obligations. If the lien
shows up on public records or a credit report, but the original lender
says that you have paid it, have them send you a copy of their
documentation regarding your reconveyance.As with most issues that come
up when financing or refinancing a home, this one can be resolved by
remaining diligent and keeping proper paperwork. As always, it’s a good
idea to check your credit report regularly, particularly if you plan on
taking out a loan in the near future.
©Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of
Retro Marketing, a firm devoted to informational Websites, including
End-Your-Debt , a Website devoted to debt consolidation information and
HomeEquityHelp.net, a site devoted to information on home equity loans.
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