The question…

I am in the process of refinancing my house into a lower interest rate and taking out the equity. The title search listed a lien from Mellon Bank. This was a line of credit loan taken out in 1992.

In 2001 we filed bankruptcy & Mellon Bank was notified of the bankruptcy. The house was not included in the bankruptcy. I stopped paying on the loan. Mellon Bank transferred the loan to Citizens Bank. Citizens bank transferred the loan to Assest Acquisitions Group. I did not received any payment requests from Mellon, Citizens or Asset Acquistions. No one has requested payment for this loan since 2001.

The title company contacted Asset Acquisition and claim they now hold the original Mellon lien.

My question is - is this correct?

Asset Acquistion did not enter a lien on my house & Mellon Bank should have released their lien when they transferred the lien.”

My answer:

Mortgage loans are liens on the secured property and are not released until paid in full. If the events occurred as stated this mortgage was never paid in full, therefore the lien against the property was never released.

Bankruptcy does not eliminate secured debts, ie. mortgages, car loans, etc., only unsecured debts like credit cards which is why it was not included …it can’t be.

The subsequent tranfers from Mellon to all the other lenders was simply one bank selling a “non-performing” mortgage to another. Each of them waiting for the loan to start performing (getting the payments to resume as scheduled) or waiting for a refinance or sale of the property to push the payor (you) to deal with the problem.

Non-performing loans are sold for pennies on the dollar to specific investors (lenders) who are prepared to wait for their “investment” to payoff. They don’t spend any money sending out dunning letters or phone calls to get you to pay. They don’t spend money on lawyers to toss you into foreclosure…they simply wait for you to sell or refinance. They know the lien must get paid sooner or later through one of those activities…and as I said earlier….they are prepared to wait.

So to answer your question…”Yes”…the title company is right. You’ll have to pay off this lien to refinance. The title company cannot legally close your refinance without paying off this credible lien. You have equity, so simply borrower the amount needed to pay them off and close the refinance.

Or just let it sit…and don’t refinance. Just know at sale time, the lien will still be there…and the bank that holds the lien at that time will get the money.

Thanks for the question…

Good Luck!

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