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By Charles Essmeier
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 (http://www.end-your-debt.com/>debt) 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.
com, a Website devoted to debt consolidation (http://www.end-your-debt.com/
>debt) information and HomeEquityHelp.net, a site devoted to information on
home equity loans. (http://www.homeequityhelp.net/>)
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