Q: Our home has a lien on it from the Georgia Department of Revenue. The Department of Revenue gave us the go ahead to refinance our loan or get a loan modification. However, my lender has told me that we need to find a title company to help us out.
We owe the Revenue Department approximately $10,000. They have allowed us to pay off the loan on an installment plan. Our house is worth about $50,000 even though we paid $111,000. What do we need to do here?
A: The reason the lender has informed you that you must get help in refinancing your loan from a title insurance company is that the lender must receive a title insurance policy on the new loan. Unfortunately for you that Department of Revenue lien is a cloud on the title to your home.
However, by working with a title insurance company you might get the title company to insure over the lien from the Department of Revenue and enable the title company to insure the new loan that follows the lender’s underwriting guidelines.
If the title company is unable to issue that title insurance endorsement over the lien, the title company will tell you what steps you need to take to have the Georgia Department of Revenue subordinate their lien to the new loan you are about to obtain from your lender.
In essence, the Department of Revenue would issue a letter confirming its lien on your property but agreeing that their lien would not trump the new lien of your lender. The title company will have the experience to guide you as to the proper number to call at the Georgia Department of Revenue and know what documentation it will need to issue a clear lender’s title insurance policy to your lender.
You probably can’t close without the title insurance policy, whether you had the lien or not. The only issue is getting the information you need to allow you to go forward with the refinancing.
It’s interesting that your lender didn’t give you names of any title insurance companies they work with to get the documentation in line for the refinancing. If they did provide their contact information, you should call these title companies and find a person there who seems most responsive to your request. Then, move forward to get all the information together that will be needed to complete the loan modification.