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There are sometimes legal issues that arise as a result of applying for an FHA refinance loan. Those issues give way to frequently asked questions and in many cases the best advice is to seek legal advice for a lawyer and avoid taking legal guidance or tips from a non-lawyer.

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FHA Refinance Loans and Title Issues

November 9, 2015 - While we do not give legal advice, there are sometimes legal issues that arise as a result of applying for an FHA refinance loan. Those issues give way to frequently asked questions and in many cases the best advice is to seek legal advice for a lawyer and avoid taking legal guidance or tips from a non-lawyer.

We recently fielded such a question about FHA refinance loans--a situation where the bank’s title search uncovered a lien against the property from a third party. In this case, the title searched revealed that a third party had a potential or actual lien on the property to be refinance with the FHA mortgage.

The situation included the borrower asking for legal advice, but that advice included “declare bankruptcy” since there were extenuating circumstances that could complicate things for the home owner.

Yes, the borrower definitely did the right thing by seeking legal help, but there is an important caveat to the “call a lawyer” advice that all who find themselves in such situations should remember--not all lawyers have expertise or understanding of real estate law, and/or how the laws of your state might affect your legal situation should the matter need to go to the legal system for resolution.

A more helpful piece of advice aside from, “contact a lawyer” in such cases? Seek out legal counsel from a local or regional lawyer who has specific legal experience in real estate law and understands how that laws of that state might affect the outcome of any case brought as a result of contacting/retaining/employing legal counsel to help out.

Not all lawyers have the experience required to successfully deal with the complexities of certain legal issues associated with titles, liens, property ownership, and disputes over them. Subject matter experts in real estate law are helpful, legal experts with real estate law knowledge are the borrower’s best bet at getting the right answers to these sometimes difficult questions.

In some cases you may wish to deal with the FHA directly by calling them at 1-800 CALL FHA to discuss the situation in general. Is it possible that in some cases, FHA mortgage loan guidelines were not fully satisfied or complied with on the original loan? It all depends on the facts of the matter, but borrowers should keep in mind that FHA cannot dispense legal advice.

However, an FHA representative might be able to help determine whether the original loan was in compliance and what steps might be taken if that is not the case.