Also never thought of the paperwork issues dealing with after the loan is paid off. Like bob gets his money and just forgets to remove the lein, me thinking the lein is gone go to sell the property later (or go to the bank to get regular heloc or mortgage and they are like "hey what's this?!?!) So yeah I can see some issues here,
It could be more complex than the lender not releasing the lien (this would be a fairly simple thing to fix), there may be issues if there is a discrepancy in the legal description, there may be issues with referenced recording information, if there are any issues with the release of the lien and the lender died before the issue is resolved, there may be additional steps needed to be done in probate court.
was worth looking into though.
You are able to keep this thread open for as long as you wish if you want to.
As mentioned previously, I would advise both you and a potential lender from pursuing this for the reasons posted above, unless you are confident the lender knows what they are doing, and are experienced with these types of loans.
I am not sure what bank(s) you have applied with, nor what county you are located in, however you might want to inquire with smaller lenders who might be more willing to make the kind of loan you are seeking.