Will a Lien or Judgment Against My Home Prevent Me From Getting a Loan Modification?
New Jersey homeowners have reported that their lenders have denied or cancelled loan modifications due to alleged titles issues against their home, such as a lien or judgment like a second mortgage, equity loan, Home Owners Association (HOA) lien, or credit card judgment. The Lenders state that the liens or judgments prevent them from having clear marketable title. However, this should not stop a modification.
Lenders want to make sure that they have the first lien position against your home so that they will have the first claim to the property in the event of foreclosure.
However, there is a New Jersey statute that protects the homeowner against this issue, and the lenders are not allowed to cancel a loan modification for this reason. Your modification is not a new agreement. It modifies your original mortgage, so that mortgage keeps its lien position.
A Modification should not be denied or cancelled for clear and marketable title issues, if those issues arose after the mortgage was recorded
According to the New Jersey Recording Act (N.J.S.A. 46:26A-12), New Jersey is a “Race-Notice State.” This generally means that a recorded title document will have priority over any later recordings.
N.J.S.A. 46:9-8.2 provides that the judgments or liens listed in the complaint do not affect the priority of a Lender’s mortgage, and therefore do not affect title. N.J.S.A. 46:9-8.2 provides, in pertinent part:
- Notwithstanding any other law to the contrary, the priority of the lien of a mortgage loan which has undergone a modification, as defined by this act, shall relate back to and remain as it was at the time of recording of the original mortgage as if the modification was included in the original mortgage or as if the modification occurred at the time of recording of the original mortgage.
If your mortgage was recorded before the liens and judgments identified by your lender, they should NOT deny or cancel the modification.
My Lender Denied my Loan Modification Due to Title Issues. What Should I Do?
If your lender has denied or cancelled your loan modification due to a lien or other title issue against the property, contact the Law Office of Ira J. Metrick today. We can carefully examine your situation and determine whether your lender has the authority to deny or cancel your modification, and we can help you take legal to enforce your Modification.