How do I get rid of a second mortgage lien?

In order to remove your second mortgage off your property you must initiate an adversary proceeding or file a lien stripping motion with the court. Most courts require that you file a lien stripping motion that will allow you to obtain a court order approving the removal of your second mortgage.

What is 2nd lien debt?

Second-lien debt refers to loans that are prioritized lower than other, higher-ranked debt in the event of bankruptcy and liquidation of assets. Other names for second-lien debt include junior debt and subordinated debt.

Can a bank foreclose on a second mortgage?

Yes, a second mortgage holder can foreclose, even if you are current on your first mortgage. After taking care of expenses, the mortgages will be paid off in order of priority; until the first mortgage is fully paid off, the second mortgage holder will not receive any funds.

What is lien stripping the second mortgage?

Lien stripping is a process that allows bankruptcy debtors to strip off (eliminate) wholly unsecured junior liens (such as second mortgages, home equity loans, and HELOCs) from their homes. In most cases, you can only get rid of your second mortgage or other junior lien if you file for Chapter 13 bankruptcy.

Will a second mortgage hurt my credit?

Closing costs for second mortgages can be as much as 3% to 6% of your loan balance. And if you need a second mortgage to pay off existing debt, that extra loan could hurt your credit score and you could be stuck making payments to your lenders for years.

How does a bank release a mortgage lien?

Here are some commonly asked questions about mortgage lien releases. When a bank loan is paid off, a Release of Lien or Certificate of Satisfaction is provided by the bank and is recorded in the Land Records office to provide notice that the prior lien has now been paid in full and released from the property.

What happens to second mortgage liens in foreclosure?

But if the property had sold for only $200,000 at the foreclosure sale, the total amount would go to the foreclosing lender. The second mortgage lender and the judgment creditor would receive nothing and their liens would be wiped out in the foreclosure. However, this does not mean that the debt disappears.

Can a lien be released on a house?

However, at times, lien releases get “lost” in the mass of paperwork facing mortgage lender staff. The burden of getting the lien released may fall on you, the homeowner. While possibly frustrating, you have multiple options to get a lien release on your real estate.

Can a closing agent record a lien release?

The agent cannot officially record your new mortgage until he records the former lender’s release of lien. Closing agents should record the lien release at the same time they record the new mortgage.

When does a second mortgage lien need to be released?

Most states require lenders to file a satisfaction of lien form within 30 to 60 days of the loan closing. If your lender does not file a satisfaction of lien within the time frames established under state law, you should contact a real estate lawyer. Failure to release a lien can lead to damages payments.

What can I do if my mortgage did not release a lien?

Give your lender reasonable time, possibly two to three weeks, to release its lien. Then call or visit your lender. Advise the lender that you have yet to receive its “release of lien” document.

Can a second mortgage be taken out against a property?

A second mortgage is a lien taken out against a property that already has a loan on it. A lien is a right to possess and seize property under specific circumstances.

Where can I find a lien release document?

The lender will record the Deed of Trust or Mortgage document in the public records with the appropriate agency in the county where the property is located. Once the loan is repaid, the lender should provide a recordable lien release document.