44

I have a 30 year, fixed rate mortgage from the year 2000. I have never missed a payment and don't have any other debt. A couple of months ago, I a got a letter sent by a company I never heard of (working in conjunction with my mortgage company) stating that they had placed a lien on the mortgage.

Can you explain this? It doesn't make any sense to me.

  • 1
    Did the letter simply state that a lien was being placed with no explanation as to why? Was the amount large or small? – Freiheit Jan 4 '18 at 18:04
  • 76
    Sounds like a scam to me. Only correspond with your known mortgage company to confirm that your account is in good standing. Do not reply to the unknown party, or call any numbers that they provide for you to call. – Grade 'Eh' Bacon Jan 4 '18 at 18:14
  • 9
    Note: this type of question asks us to speculate on the possible causes. Once you find out the actual cause please let us know! – TTT Jan 4 '18 at 19:09
  • 6
    You don't own the mortgage, the bank does. So there are three possibilities: (1) The lien is literally on the mortgage; not your problem. (2) You misremembered the letter, and the lien is on your property, not the mortgage. (3)The letter was poorly written. Besides the other suggestions, you should check with whatever government agency (probably county clerk) your deed is registered with and see whether any liens have been filed. – Acccumulation Jan 5 '18 at 0:43
  • 5
    You may want to paste the specific text of the letter into the question, redacting any identifying information but otherwise leaving the letter intact. There are two possibilities: this is a scam, or this is legitimate - and the exact text may help us tell you which is which. – Joe Jan 5 '18 at 17:48
63

RocketLawyer has a brief review of how to place a lien. Searching Money.SE for 'lien' may also turn up some helpful information for similar situations.

You should exercise extreme caution when contacting interested parties about a debt, because it can be viewed as a confession of the debt, or renew the statute of limitation on the debt. But the company that placed the lien or your mortgage company should be able to explain what the lien was for.

There are a few possibilities:

  • a mechanics lien - Was work done on your house by a contractor that has an outstanding debt
  • a tax lien - Are back taxes owed by you or a previous owner on the property. A title search and title insurance should have been done prior to you buying the home to make sure this didn't happen.
  • a judgement lien - Have you had a divorce or other lawsuit where payment was owed and not sent?
  • a fraudulent lien - Sometimes liens are filed by scam artists. This is fraud and you should be cautious
  • a simple mistake - Despite being important to you, sometimes lenders and mortgage companies are not careful when filing paperwork. This could be a simple address mixup.

First review the letter you received and the amount. Determine if either the issuing company or the amount match up to any previous debts you held. If they do that is a clue as to where the lien comes from.

Review your credit history. Any liens stem from non-payment. Dings on your credit would also offer a clue as to the root cause of the lien.

Exercise extreme caution when communicating with the company that filed the lien. They definitely do not have your best interests in mind and may use aggressive debt collection tactics. This company may also not be legitimate, do not give them your personal information. Verify any contact information they offer with a second source.

Communicate carefully with your mortgage company as well. You are their customer and they should be trusted, however they are not the origin of the lien nor in a position to settle the lien. They are a good first contact. They would be able to verify that they really did work with the company that sent you a letter to file the lien. They may be able to find out where the lien originated. Finally they can ensure that this is not a paperwork mistake on their part.

You should endeavor to resolve this issue and either clear the lien or settle the debt. Approach this with caution as you are dealing with a debt collection or possibly a scam and you do not want to pay money that is not genuinely owed. Reviewing your case with lawyer might be a good idea also.

  • 23
    Contacting the primary lien holder (i.e. the company that holds your first mortgage) is a good idea. They have a vested interest in clearing incorrect or fraudulent liens on the property. – Justin Ohms Jan 4 '18 at 20:44
  • 7
    Please remove the line, "The company that placed the lien or your mortgage company should be able to explain what the lien was for," from the beginning of your answer. As an early on sentence in your answer, it misleads one into thinking that they should contact that you are preparing to recommend contacting them, even though this is potentially dangerous as your answer later notes. – jpmc26 Jan 5 '18 at 14:02
  • 2
    @Mindwin Yes, I'm fully aware. (You can see I have over 12k over on SO. ;) ) But I wasn't sure how that might make the text weirder, and I don't know nearly enough about the issue to replace it with anything. – jpmc26 Jan 5 '18 at 15:05
  • 3
    I feel like I put a lien on this conversation because I was tired of editing my own post! :D – Freiheit Jan 5 '18 at 15:47
  • 2
    Would a lawyer in your employ contacting the various parties while investigating the claim also trigger the penalties such as the confession of debt or renewal of the statute of limitations? – Roddy of the Frozen Peas Jan 5 '18 at 16:11
12

I agree with the other answer and the various comments relating to how to pursue this; the first, best place to start is whomever holds your mortgage (and who is named in that letter). I also am suspicious that this could be a scam - either a very wide-net scam that just mails something like this to everyone with a particular mortgage lender (it's easy to get that information in public files), or a very targeted one specifically trying to get money from you.

However, one way or the other, it's likely at some point you'll need to contact the alleged creditor. Here's some example text you could consider using as a baseline.

To whom it may concern,

I have received a notice that you have placed a lien on my property, >xxx<, pursuant to alleged reasons >reasons given<. I write to give notice that I do not acknowledge a prior business relationship to your entity, >entity<, and do not acknowledge a debt owed.

Please submit documentation of any alleged debt, as is required pursuant to the Fair Debt Collection Practices Act, section 809 (a). Please cease any debt collection activity until and unless you provide such information, including but not limited to the name, address, and phone number of the alleged original creditor(s), any judgement that relates to this matter, and any verification paperwork that your agency has obtained relating this alleged debt.

At this point, I wish to inform you that I do not acknowledge any debt, and dispute the allegation of a debt in your original letter. I reserve the right to amend my statement pending further details of the alleged debt are provided, as is required in the Fair Debt Collection Practices Act, section 809 (b).

Thanks,

This would be appropriate if the lien is based on a debt of some sort. If the alleged reason behind the lien is not a debt - which would be unusual - then this may not be appropriate.

The point of this is to both avoid the appearance of admitting to a debt (particularly one you aren't aware of!) and to directly invoke your rights under the Fair Debt Collection Practices act. The creditor would, after this letter, then have to cease debt collection activity until they send you such information.

  • The text "do not acknowledge a(ny) debt" is repeated in the first and last paragraphs. Is that on purpose or by accident? – RonJohn Jan 5 '18 at 18:54
  • 3
    On purpose, for sure! That's repeated for clarity, as the point of this is largely to make it clear you do not. – Joe Jan 5 '18 at 18:58
6

Liens are legal matters that are granted by the courts. If this is legitimate there will be some record of it on file with the state. Contact your county clerk's office and see if there were any judgments levied against you that you were failed to serve papers for.

But this strikes me as an extension of the invoice scam-- send an invoice for fake goods/services to random companies and hope some clueless AP clerk cuts you a check. If they couldn't find you to serve papers at your home or workplace, how was it so easy to send you a lien letter?

I bet the lien amount is for less than $10k as well-- the magic number below which scammers are immune to lawsuits and prosecution.

That this lienholder claims to be working with your mortgage lender strikes me as even more suspicious. Liens impose a pecking order in terms of who gets paid first in the event you become insolvent. Banks are not in the business of charity and sharing-- they want their money from you, first, and to hell with everyone else. Nevermind working together, these two entities should not have any reason to be talking to each other in the first place. It's easy to pretend to be though given how easily your lender's name can be divined from public documents.

Do not contact this supposed creditor, at all. Not even to disavow the debt. If it's a scam, opening a line of communication is just playing into their game. Besides, according to them, they already won by virtue of being granted a lien. They get paid when you sell the house. If they're demanding cash now, they're trying to con you.

If you feel the need to discuss this with anybody, find a bankruptcy lawyer (they handle debt-related issues like this) and have them verify legitimacy. They'll know exactly who to call or what databases to look in. Many offer free consultations, and if this turns out to be fraudulent, they may even be able to shake this company down for FDCPA violation fees and earn you some money.

  • 1
    I may not be an expert on US law, but this seems wrong to me: less than $10k [...] scammers are immune to lawsuits and prosecution -- Issuing court proceedings based on incorrect or misleading information is illegal whatever the amount filed for, just about wherever you are based, and I've never heard of a court that is reluctant to use the various available penalties for abuse of process. – Jules Jan 6 '18 at 14:28
  • 1
    @Jules You are right, but you're also assuming the presumed scammer actually engaged the court and put themselves up to perjury. Why bother taking that risk? If you just make the victim think you're about to sue/have sued and won, it's not perjury, it's just simple fraud...which unlike perjury, falls pretty low on police and attorneys' lists of priorities. – Ivan Jan 7 '18 at 7:20

protected by Joe Jan 5 '18 at 20:36

Thank you for your interest in this question. Because it has attracted low-quality or spam answers that had to be removed, posting an answer now requires 10 reputation on this site (the association bonus does not count).

Would you like to answer one of these unanswered questions instead?

Not the answer you're looking for? Browse other questions tagged or ask your own question.