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Lien On Me

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Posted On: 05/23/2012

QUESTION:

We paid off our mortgage. Even though the credit union verifies that the balance is zero, they say it will take 14 weeks to remove the lien. This seems like a huge amount of time. Is this typical?

ANSWER:

See Your Public Records

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Congratulations. Your property is now among the one-third of the prime residences owned free and clear of all liens.

You certainly want evidence that your loan has been repaid in full and released. Check with the local recordation office to see how long it takes to get a release -- the delay could be with the lender, the recording office or both. Whether 14 weeks is typical or not depends greatly on your lender and where you are located.

The problem here is what happens if you want to sell or refinance the property. For the moment, the lien appears to be live and outstanding on public records. This could delay a sale or refinance and such setbacks could lead to additional costs and irritation.

QUESTION:

Do we still qualify borrowers on the basis of start rates and not the highest monthly costs that borrowers might face?

ANSWER:

Under the new Wall Street reform, lenders must now assure that all borrowers have an ability to repay their mortgages. This is done in part by comparing borrower income to the monthly cost of a fixed-rate loan or comparing monthly income to the highest possible cost that can be incurred with an adjustable-rate mortgage during the first five years of the loan term.

In addition, these rules effectively ban “no doc” loan applications, another qualifying shortcut from the toxic loan era. Now lenders must verify borrower income and employment or source of revenue.

These changes are hugely important because they make lending less risky for borrowers, lenders and mortgage investors. Had such protections been in place in 2000, there would have been fewer “nontraditional” loans and thus fewer foreclosures today.

Peter G. Miller is the author of The Common-Sense Mortgage and a veteran real estate columnist. Have a question? Please write to peter@ctwfeatures.com.

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