Legal Question in Real Estate Law in Iowa

I am currently getting ready to sell my home. During the title search the last record of a loan was found in 2013 when I refinanced. My current mortgage shows up on my credit report, however there was an error made and no encumbrances were placed on our home. My attorney stated that due to the mortgage companies error I do not have to pay out the mortgage at closing. I used a VA loan and am using that again to buy my new house, which I will close on two weeks after my current house. I need to reinstate my full entitlement for my new loan to go through. My question is two parts. Besides the moral portion which I understand, legally do I have to pay off the current mortgage or can I attempt to keep the amount and fight it in court due to the mortgage company having no legal claim to the property and it no longer belonging to me? Also can I have my VA entitlement reinstated with the outstanding balance since there is no encumbrances so there is no reason for the VA to guaranty the loan?


Asked on 7/26/15, 10:04 am

1 Answer from Attorneys
Thomas Moens Moens Law Offices, Chartered

While there may not be a lien against the real estate, you are still obligated under the terms of the promissory note you signed. This means you would be personally liable for the balance due. There also is the possibility that the mortgage was properly recorded but either mis-indexed or missed by the abstractor. This could make for some excitement for everyone if the lender later commences foreclosure proceedings. You also correctly observe that you may not have eligibility for another VA loan until this one is paid. It is also likely that with this debt, you would not qualify for a non-VA loan either. And then, yes, that pesky moral portion is not to be ignored either.

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Answered on 7/26/15, 11:10 am


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