Expert: Jessica Bryan - 6/5/2006

Question
Is this good news for me or bad news?  We were due to close on last week and found that the sellers purhased the property years ago.  Additionally, the mortgage company sold ther mortgage to another company who "now" has no record of ever holding there mortgage.  They haven't paid a mortgage for over 7 years.  We still want the property, but if the seller ends up owning the home free and clear, this means that the money that we are approved for would go directly to the seller, is this correct?

Answer
Hello;
I am finally back online!  My computer crashed and I have a huge amount of email to answer.  However, if you would still like an answer to your question I will be happy to answer within a few days…trying to get to the earliest ones first.  Please understand and if you promise not to dock me on my "response time" scores I will be happy to help you.

Thanks for your understanding.

Jessica Bryan
Managing Broker
House to Home Realty Services
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Dear Muffin:
Thanks for your patience.  Here is my answer: a real estate attorney or title company can do a title search and will determine whether the mortgage was paid off and the title transferred free of encumbrances to the owners.  If that is the case and there is no cloud on title (meaning no reason there is someone with a claim to the property for unpaid debts) then indeed the money that you pay will go directly to the seller as pure profit.  If, however, there is still mortgage owning, the sellers will have to pay off that portion of the debt or there will be a problem with the title to the property being delivered to you free and clear.  If this is the case, you will still need to pay off the mortgage and even though the record of the mortgage is lost, the courthouse should have some recorded deed somewhere.  I suggest you consult an attorney who is accustomed to doing title searches before you complete the purchase.
Good luck and best wishes.
~Jessica Bryan