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asking1 · Jul 8, 2012, 12:16 PM

Are we able to renew our mortgage if there is a lien on it? If not, what happens?

Fr_Chuck · Jul 8, 2012, 12:23 PM

A mortgage is a lien?? Do you mean there is another lien on the property besides the mortgage

AK lawyer · Jul 8, 2012, 01:20 PM

If there is a lien on the property junior to the mortgage, upon renewal the lien would become senior to the new mortgage. Thereore the lender may decide that there is not sufficient equity to protect their interest and deny the renewal.

asking1 · Jul 9, 2012, 07:39 AM

To be clear, I have had a mortgage on my house for years. A lien was put on by a creditor about 1.5 years ago. Does that mean that the lien is now 'senior' to the house mortgage?

If so, and I cannot renew the first mortgage, what happens? Obviously the first mortgage needs to be paid off - but if I can't do it, what happens?

asking1 · Jul 9, 2012, 07:42 AM

Originally Posted by Fr_Chuck

a mortgage is a lien ??? do you mean there is another lien on the property besides the mortgage

Yes, there is a first mortgage. 1.5 years ago, a lien was put on by a creditor.
My payments for the first mortgage are up to date. How do I continue to pay the first mortgage if it is 'junior' (The lien is for $90,000; the first mortgage is for $40,000)

AK lawyer · Jul 9, 2012, 08:04 AM

Originally Posted by asking1

To be clear, I have had a mortgage on my house for years. A lien was put on by a creditor about 1.5 years ago. Does that mean that the lien is now 'senior' to the house mortgage?

If so, and I cannot renew the first mortgage, what happens? Obviously the first mortgage needs to be paid off - but if I can't do it, what happens?

Originally Posted by asking1

Yes, there is a first mortgage. 1.5 years ago, a lien was put on by a creditor.
My payments for the first mortgage are up to date. How do I continue to pay the first mortgage if it is 'junior' (The lien is for $90,000; the first mortgage is for $40,000)

You are apparently not understanding what I wrote yesterday.

No, the lien, apparently a judgment lien, was recorded after the date of your mortgage, correct? If so, it would be junior to the mortgage. What I mean by "junior" is that the mortgage is not impaired by the lien. If the mortgagee (bank or other person or company to which you owe the mortgage debt) were to foreclose, the owner of the lien would become unsecured.

So the mortgage is senior. You continue to pay it. The creditor which owns the "junior" lien can, in theory, foreclose on this lien, but to do so, he/she/it would have to pay off the mortgage. That's not likely to happen. Alternately, the junior lienor could simply wait until you pay off the mortgage, and then foreclose.

If you want to "renew" your mortgage, you will have to re-finance the full $130,000 debt. The lien would be paid off from the loan proceeds.

ScottGem · Jul 9, 2012, 08:11 AM

If you renew (the usual term is refinance) the mortgage, it becomes a new loan and would then become junior to the judgment lien. Since no lender is likely to want to take a secondary lien in this situation its unlikely you will get a refinance, unless you borrow enough money to pay off the judgment.

While the secondary lienholder could foreclose the general process is for them to wait until you sell and then require that you satisfy the lien before you can complete the sale.

asking1 · Jul 10, 2012, 03:59 PM

Originally Posted by ScottGem

If you renew (the usual term is refinance) the mortgage, it becomes a new loan and would then become junior to the judgment lien. Since no lender is likely to want to take a secondary lien in this situation its unlikely you will get a refinance, unless you borrow enough money to pay off the judgment.

While the secondary lienholder could foreclose the general process is for them to wait until you sell and then require that you satisfy the lien before you can complete the sale.

__________________________________________________ _____
Scott, I am still not sure. So are you saying that my bank may not refinance my first mortgage because I have the lien? Since I can not pay off the lien, what happens? Sorry that I am still not clear.

ScottGem · Jul 10, 2012, 04:02 PM

Correct they probably won't refinance.

What happens is you don't get a refinance and you have to pay the existing mortgage.

asking1 · Jul 10, 2012, 07:02 PM

Still not clear. If I can't pay the lien ($90,000), do I continue to pay the 1st and 2nd mortgages ($40,000 and $130,000 respectively) - or does my property go into foreclosure? I can pay the first and second mortgage and am not in default on these. (I would even be willing to pay something on the lien but I was told that I had to pay the $90,000 in one shot.)

ScottGem · Jul 10, 2012, 07:08 PM

You continue to pay. The lien holder is unlikely to be able to force a foreclosure.

AK lawyer · Jul 11, 2012, 04:54 AM

Originally Posted by asking1

Still not clear. If I can't pay the lien ($90,000), do I continue to pay the 1st and 2nd mortgages ($40,000 and $130,000 respectively) - or does my property go into foreclosure? I can pay the first and second mortgage and am not in default on these. (I would even be willing to pay something on the lien but I was told that I had to pay the $90,000 in one shot.)

In Post #5, you didn't mention the second mortgage, which, coincidentally happens to be the total of the first mortgage and "the lien". Are you sure about your figures?

But no; it is probably incorrect that you would have to pay the lien in one shot. Not that it makes any difference; the holder of the first is not llikely to refinance until the second and the lien are paid off.

asking1 · Jul 11, 2012, 12:56 PM

Thanks for your respectful manner. Actually, my second figure was not correct. My first mortgage is $40,000, my 2nd is $102,000 and the lien put on 1.5 years ago is $90,000.

So if I can't get a first mortgage and can't pay the lien, what happens?

AK lawyer · Jul 11, 2012, 01:11 PM

Originally Posted by asking1

...
So if I can't get a first mortgage and can't pay the lien, what happens?

Please re-read my comments in Post #6.

What happens if you can't pay the lien? Probably nothing until you try to sell the property. At that point, the lien will be paid off out of the proceeds (assuming there is sufficient equity).

asking1 · Aug 2, 2012, 10:16 AM

Good news,
I was able to refinance my first mortgage today (for five years) without any difficulty. I now have peace of mind.
Thanks to those who responded to my question.

asking1 · Aug 2, 2012, 10:19 AM

Peace of mind! I was able to renew my first mortgage today for five years. This occurred without any problem.
Thanks to those who responded to my query.