I have been doing title research on a house that is coming to auction. It was purchased by the current owner in 2004 with 100% financing using two loans. Six months later, both loans were refinanced with two new loans. A year after that it was refinanced again replacing the two loans with two new loans. There are reconveyances for the middle set of loans when the current loans were put in place. But I cannot find any reconveyances for the 1st two loans. The 2nd and 3rd refinances were with major lenders and appear to have been processed through escrow. It seems like the reconveyances are missing, but it also seems logical that the 1st two loans were paid off and that this is more of an administrative error than a fatal flaw. Is this a common situation? Is a reconveyance required? Or is paying off the loan adequate? Are there other resources available to us to research the status of the loans other that the County recorder?
Hi Richard - interesting case. I will tell you I made a lot of money on a deal that re-fi’d multiple times but had an older loan that was missed and truly never reconveyed. When the older loan came to sale everyone at auction assumed it was a third and I bought a $550k house for $175k. So - never assume.
That said it is likely that your loans have been reconveyed. Very odd that not one, but both, are missing recons. I’d be careful to watch for title issues like having used the wrong APN or legal description (these mistakes sometimes get repeated in subsequent escrows as they’ll use docs from the prior escrow).
I’d also recommend chatting with the title officer at your title co. My guess is that they will require recons in order to provide title insurance - and with the mess the banks are currently in that could be quite a challenge even if the loans were paid.
I’d also recommend looking at the docs from the middle escrow, to see if there aren’t some clues as to handled the escrow. Many times the escrow numbers include the escrow officers initials - I have actually contacted them and perhaps in exchange for a gift card at a local restaurant gotten them to go pull the file and take a look at what happened.
I talked to an umemployed title officer and he thought it was no uncommon to have the reconveyance missing. I will try to contact the title company for the 2nd set of loans. Is the MERS system useful?