About 18 months ago my wife and I built a home. We got a Construction to Permanent Loan. Shortly after converting to Perm, my loan was sold to another mortgage company. A month ago we got a good deal on refinancing with a different company so we began the process. Yesterday the loan officer called and said there was a problem. County Deed records never showed the Construction Loan paid and the Permanent loan transferred to the new mortgage company. What I discovered is: When ever a loan changes hands you should always get a paid in full letter from the old mortgage company stating that their note is paid in full, the Registrar of Deeds has been notified, and the responsibility for collection of the mortgage is with the new company. In effect, what had happened is the orginal construction loan and the new mortgage were still encumbered to our house, making it look like we owed way more than the house was worth. The new loan officer said it may take as long a three weeks to untangle the mess. Luckily I know some people both at the Registrar of Deeds office and the orginal lender, we should have all the paperwork approved and signed to void the original note by the end of the week at the latest.

But, with all the refinancing going on now, beware! Something like this could run you past your rate guarantee limit and cause you to lose your locked in rate.