11 months ago my mother moved from her old house which is paid off, into Sun City Georgetown.
They talked her into a 6 month "Interest only Bridge Loan" at @ 7% until she could sell her old house. She was able to finance 90% into this Bridge Loan, with one 6 month extension allowed and the remaining balance due in November.

She has not been able to sell her old house, and so we have turned that into a rental property. We also started the process of obtaining a regular 30 yr fixed mortgage on the Georgetown house. However 7 different underwriters have rejected this refinancing because of an issue with the Title. According to our Mortgage Broker, the bank who issued the bridge loan, "filed the Title as paid in cash". Apparently, this means that she is unable to qualify for a simple refinance, unless it is a cash-out refinance where she would need to bring the additional ~10% to closing.(80% loan to value).

My only idea, to avoid bringing a bunch of extra cash to closing, is to do a cash-out refinance on the old house, and use that to pay off the bridge loan. But I am left with 3 questions.

Is there some other way around this snafu?

If the Title is marked paid, do we have to pay the Bridge Loan note? It seems the bank is left with little recourse, or would benefit from "fixing" the title somehow. Should I get a lawyer?

Is there something else that I should be looking into?

So she did a 90% cashout "Bridge loan" on the house and that is the problem?

Sorry maybe I glossed over that.
She has the bridge loan, but it is due in full next month. Like a 12 month balloon loan. Since the old house did not sell in a timely fashion, she is not prepared to pay off the full loan value. So, I began trying to get a refinance into a fixed rate long term loan on the new house. However we have been unsuccessful in refinancing the new property (with the balloon/bridge loan) because of "issues with how the title was filed". I am starting to think it involved some sort of lien placed on that property, but no one has used that term. The mortgage broker has said "issues with how the title was filed" and "the title was marked as paid in cash" and therefore we cannot refinance at greater than 80%.

She got 90% of what you think is the value of the home?

Is the bridge loan collateral the old house or the new house? Are you refinancing that loan using the old house or the new house as collateral?

I'm not 100% sure what you are talking about because your post is a bit confusing, but did the bridge loan lender not take the new house as collateral or maybe they did not structure the loan for the house as purchsse money loan?

If they didnt do it as a purchase money loan, and now the property is your moms homestead, i can see that being a problem and the only way to get a valid lien on the house now is through a home equity loan (if there is not an existing lien on the new house to refinance).

Sounds like she pulled 90% out on her old primary to pay it off and get a down payment on the new one. Now that it has not sold she cannot get a loan on it anywhere near 90% as an investment property, Best case is likely 80% because of the cash out and likely 75% without a ****ty rate.
Closing costs rolled in she is likely short about 15% even at 80%.

AMIRIGHT?

Just reread and if bridge loan is secured by 1st home there is no way to refinancing that loan onto the 2nd home. Only option would be home equity loan. This is based on law in Texas Constitution limiting what types of liens may attach to a homestead.

If 90% loan is on the second home, following applies:

I'm guessing the bridge loan attorney prepared a warranty deed when it should have been a warranty deed with vendor's lien. No good purchase money lien to refi. They might not have valid lien on the property, but they can probably sue her directly on the note.

Start the process for home equity immediately.

You may consider contacting bridge loan company and tell them their docs are causing an issue and see if they will grant a modification and extension.

Contact title company who closed and tell them you are having issues refinancing and see if there is anything they can do about it.