Posted by JohnBoy on June 20, 2001 at 07:40:48:
It would appear to look like a second mortgage has been recorded against the property. It does not effect the first mortgage or any other liens that have been recorded prior to the mortgage performance being recorded. It protects the buyer from any future liens that the seller may cause to be recorded after recording the performance mortgage.
If the seller did something that caused a lien to be recorded against the property you could use the recorded performance mortgage to foreclose on the property if the seller doesn’t take care of clearing up any liens recorded afterwards.
If a lender was to check title they would see what looks just like another mortgage that has been recorded. Unless they were to take the time to READ the performance mortgage they would just assume it was a second mortgage on the property.
I’ve heard a performance mortgage isn’t enforceable in Texas, so you may want to research the laws in your state regarding these.