Did You Just Find Out You Signed A Partial Claim with Your Loan Modification?

What Is a Partial Claim?

A partial claim may be used as part of certain mortgage loss-mitigation programs.

For example, FHA partial claims have historically allowed certain amounts owed by a homeowner to be placed into a separate interest-free obligation secured against the property by a subordinate mortgage or deed of trust.

The exact structure and repayment requirements depend on the mortgage program and the documents involved.

One reason a partial claim can be easy to forget is that you may not have been making a traditional monthly principal-and-interest payment on it.

You continued making your regular mortgage payment.

The years passed.

But the partial claim didn't necessarily disappear.

It may still be secured against your home.

And when you decide to sell, it can suddenly become very important.

Your Mortgage Balance May Not Be Your Total Debt Against the House

This is where homeowners can get a nasty surprise.

Suppose you believe your home is worth:

$650,000

You look at your current mortgage statement and see that you owe:

$500,000

You do the obvious math:

$650,000 − $500,000 = $150,000

It looks like you have approximately $150,000 in equity before selling expenses.

But then you discover a partial claim from your previous mortgage assistance.

Suppose that partial claim is:

$125,000

Now the picture looks very different.

Estimated value: $650,000

First mortgage: $500,000

Partial claim: $125,000

That leaves only $25,000 before considering selling expenses or any other liens.

The $150,000 you thought you had wasn't really $150,000.

And if the partial claim were even larger, you could potentially discover that you don't have enough equity to sell conventionally at all.

"But I Thought the Loan Modification Took Care of That"

That's an understandable assumption.

A loan modification or mortgage-assistance program may have solved the immediate problem without eliminating every dollar that was owed.

Some amounts may have been handled separately.

That's why it's important to distinguish between:

What you're currently paying each month

and

What may ultimately be owed against the property.

They're not necessarily the same number.

A mortgage statement showing the balance of your first mortgage may therefore not give you the complete picture you need when determining whether you have enough equity to sell.

How Do I Know If I Have a Partial Claim?

If you previously completed a loan modification or received mortgage assistance, start by reviewing the documents you signed.

Look for terms such as:

• Partial Claim
• Partial Claim Deed of Trust
• Partial Claim Mortgage
• Subordinate Mortgage
• Subordinate Deed of Trust
• Promissory Note
• HUD Partial Claim

A recorded partial claim may also appear in the public property records and can be discovered during a title search.

If you don't remember signing one, that doesn't necessarily mean there isn't one.

Years may have passed since your modification, and at the time your attention may understandably have been focused on saving your home rather than remembering every document in the package.

How Much Do I Actually Owe?

Don't guess.

And don't assume the amount shown on an old document necessarily gives you everything needed for an upcoming real estate transaction.

When you're seriously considering selling, appropriate payoff information should be obtained for obligations that may need to be addressed through the sale.

A preliminary title report can also help identify recorded deeds of trust and other liens affecting the property.

That's when we can begin looking at the real numbers.

Not:

What do I think I owe?

But:

What obligations actually have to be dealt with if I sell?

That's the number that matters.

Does Having a Partial Claim Mean I Can't Sell My House?

No.

A partial claim does not automatically mean you cannot sell your home.

It means we need to understand the numbers before determining how the sale may need to be handled.

There may still be plenty of equity.

There may be enough equity to complete a traditional sale but less money left over than you originally expected.

You may have very little equity.

Or the combination of your first mortgage, partial claim, other liens and selling expenses may exceed what the property can realistically sell for.

We don't know until we look.

That's why discovering a partial claim isn't a reason to freeze.

It's a reason to get better information.

What If My Home Isn't Worth Enough to Pay Everything?

This is the question that can keep someone awake at 11:30 at night.

You thought you finally had enough equity to sell.

Now you discover another obligation and suddenly you're wondering:

Am I trapped again?

Not necessarily.

If the property's realistic market value isn't sufficient to satisfy the mortgage obligations and other required costs associated with selling, it may be necessary to explore whether a short sale or another available solution makes sense for your particular circumstances.

Short sales generally require approval from the applicable mortgage lender or servicer, and additional lienholders or claims may also need to be addressed.

That makes the transaction more complicated.

It doesn't mean you shouldn't investigate your options.

Don't Let an Unexpected Lien Stop You From Taking the Next Step

This is the point where some homeowners shut down.

They see another $50,000, $100,000 or even larger obligation and immediately think:

Forget it. I can't sell.

But you don't have to solve the entire problem today.

You only need to take the next step.

Let's determine approximately what your property is worth.

Let's look at what you owe.

Let's identify the partial claim and other liens that may affect the property.

Then we can look at the situation as a whole.

You may have more options than you think.

The Earlier We Know About the Partial Claim, the Better

I'd much rather identify a partial claim before your home is listed than discover it after you've accepted an offer.

Knowing about it early gives us the opportunity to evaluate the property and the financial situation together.

If there's enough equity, great.

If the numbers are close, we'll know that before establishing a selling strategy.

And if there isn't enough money to satisfy everything through a traditional sale, we can determine whether another approach needs to be explored.

The important thing is that we're working with the real numbers instead of assumptions.

You May Not Have the Equity You Thought You Had — But You May Still Have a Way Forward

Finding out about a partial claim can be frustrating.

Especially if you believed the financial problems surrounding your previous loan modification were years behind you.

But discovering another lien doesn't automatically mean you're stuck with the house.

It means we need to understand what you're actually dealing with.

And that's something we can work on together.

You don't need to understand partial claims.

You don't need to know whether you qualify for a short sale.

You don't need to calculate every payoff before you call.

You just need to tell me what's happening.

I'll help you start putting the pieces together.

Let's Find Out What Your Options Really Are

If you previously completed a loan modification, discovered a Partial Claim Deed of Trust and are now worried that you don't have enough equity to sell your California home, contact me.

We'll start with the property.

We'll look at its realistic market value, what you believe you owe and any additional liens or partial claims that may need to be investigated.

Then we'll determine the next step.

Sometimes simply knowing what you're actually dealing with can make the situation feel much more manageable.

Tell me a little about what's happening and I'll help you determine where to start.

Every mortgage, partial claim and homeowner situation is different. This article provides general educational information and is not legal, tax or financial advice. Specific lien and repayment requirements depend on the applicable mortgage program and documents.

Coverage area for home sellers in Orange County: Aliso Viejo, Anaheim, Brea, Buena Park, Costa Mesa, Cypress. Dana Point, Fountain Valley, Fullerton, Garden Grove, Huntington Beach, Irvine, La Habra, Laguna Beach, Laguna Hills, Laguna Niguel, Lake Forest, Los Alamitos, Mission Viejo, Newport Beach, Orange, Placentia, Rancho Santa Margarita, San Clemente, San Juan Capistrano, Santa Ana, Seal Beach, Stanton, Tustin, Villa Park, Westminster, Yorba Linda

Coverage are for home sellers in Riverside County: Banning, Beaumont, Cathedral City, Coachella, Corona, Desert Hot Springs, Eastvale, Hemet, Indio, La Quinta, Moreno Valley, Riverside, Palm Desert, Palm Springs

Areas served in San Bernardino County: Adelanto, Apple Valley, Big Bear Lake, Chino, Chino Hills, Colton, Fontana, Grand Terrace, Hesperia, Highland, Joshua Tree, Loma Linda, Montclair, Ontario, Rancho Cucamonga, Redlands, Rialto, Twentynine Palms, Upland, Victorville, Yucaipa, Yucca Valley

Can I Apply for Another Loan Modification?

What Happens After a Loan Modification Is Denied?

Can I Sell My Home After a Loan Modification?

Notice of Default After a Failed Loan Modification

Can I Stop Foreclosure After My Loan Modification Failed?

Short Selling After a Failed Loan Modification

What Happens If I Wait Too Long?

Should I Keep My Home or Sell It?

How Much Equity Do I Have?

Questions to Ask Before Making Your Next Move

How to Evaluate Your Options Before Foreclosure

NoEquity.com is the specialized real estate division of Midas Realty Group, created to help California homeowners navigate difficult selling situations with clarity, professionalism, and real solutions.

Broker Dawn Anderson (California DRE #01258205) brings more than 26 years of real estate experience along with advanced education in probate sales, inherited property, short sales, foreclosure alternatives, investment properties, and other complex real estate situations. She is a CDPE (Certified Distressed Property Expert) as will as an SFR (Short Sale and Foreclosure Resource) awarded from the National Association of Realtors. 

While we successfully handle traditional home sales, our greatest value comes from helping homeowners facing situations that require experience beyond a typical real estate transaction. Every property—and every homeowner's circumstances—are different. Our goal is to help you understand your options so you can make the decision that's right for you.

Confidential consultations are always provided without obligation because understanding your options should come before making an important real estate decision.