Today I discuss a real estate closing fiasco of an old friend and how you can avoid it.
Late 2016 sold house, moved back to CA.
Closing attorney ordered payoff 1st but not 2nd mtg. Closing attorney said “2nd mtg was included in the first mtg payoff.”
Months later, friend got notice from HUD – owe $11k. Consulted an attorney. Now making mo. pmt $200 to 300 to HUD.
Their buyers attorney contacted them. We payoff 2nd, you borrower $9k from us, do you have any collateral?
Buyer is trying to either refinance or sell and can’t. Doesn’t have clear title. Title clearly shows 1st and 2nd mtg. Seller’s attorney screwed up big time.
Seller pocketed enough to pay the $11k at closing but wasn’t aware of it. Ultimately responsible.
Know who you owe. Read CD, look at who is being paid off. If you write two mo. mtg pmt checks, both lenders should be in the payoff section.
Credit score hurt if HUD reports to credit bureaus.
What is a closing disclosure?
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