Foreclosures

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Tim Silvers
  • Las Vegas, NV
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QUIET TITLE ACTION VICTORY on 2ND MTG/HELOC but with a CATCH

Tim Silvers
  • Las Vegas, NV
Posted Jul 10 2022, 22:10

So I retained counsel to file a quiet title complaint to remove a defaulted and charged off 2nd mortgage HELOC that under state (NV) statutes was no longer enforceable (past the 10-year SOL from the date of acceleration).

The good news: we prevailed and the lien is now extinguished.

The 1st mortgage remains remains current.

The bad news (letter HERE): The 2nd lienholder we sued was MERS who took over from the original lender some years back.

The 1st mortgage is with Bank of America (BOA) and is an entirely unrelated loan. Somehow, BOA "retained legal counsel in an effort to protect the interest held in the property" and assessed over $2000 in legal fees to the 1st mortgage loan balance "per the terms outlined in your deed of trust that are considered recoverable from the borrower." This was subsequent to reaching out to BOA, making it explicitly clear to them that they made an error in that the litigation was against a mortgage that is completely separate and does not in any way affect the 1st mortgage.

My attorney is completely baffled as to how this could have happened and has no idea how to resolve since he feels BOA will rely on the language in the Deed of Trust.

Side note: Upon looking at the Deed of Trust for the first mortgage, MERS is listed as "the beneficiary under this Security Instrument".

It almost seems like MERS merged the loans under one case and charged back their legal defense fees to the remaining BOA mortgage so it cost them nothing even though there was no case directly brought against their BOA loan - only their 2nd. They did this in error and are making the borrower pay for their mistake.

Has anyone experienced this in a quiet title action against a loan on a property in which there is more than one lender?

Would appreciate any and all input.

Las Vegas, Nevada

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Chris Seveney#2 House Hacking Contributor
  • Investor
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Chris Seveney#2 House Hacking Contributor
  • Investor
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Replied Jul 11 2022, 03:54

@Tim Silvers

Wow this is interesting and have never seen this. Several questions ring in my head (putting my note investing thinking cap on).

1. Are you the owner?

2. Was there title insurance on the property ?

3. When was the 1st originated and the 2nd originated?

4. Has the 1st ever been defaulted upon

5. Was the 2nd ever in default?

A lot of unknowns but if it’s your loan request a qualified written response.

I can see your frustrations but if the 1st had to get legal counsel to protect its interest including responding to a quiet title then more than likely they have a claim to charge the fees.

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Peter Walther
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  • Winter Springs, FL
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Peter Walther
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Replied Jul 11 2022, 04:42

Unless the 1st lien holder was named in the QT action it had no business spending money appearing in the litigation.  I suspect you are not the Borrower and unfortunately, I believe only the Borrower can successfully object to the charges being added to the loan balance.

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Jonathan R McLaughlin
  • Rental Property Investor
  • Boston, Massachusetts (MA)
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Jonathan R McLaughlin
  • Rental Property Investor
  • Boston, Massachusetts (MA)
Replied Jul 11 2022, 10:56

@Tim Silvers 2k would be consistent with the cost due diligence in connection with the second mortgage and it’s implications

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Tim Silvers
  • Las Vegas, NV
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Tim Silvers
  • Las Vegas, NV
Replied Jul 11 2022, 12:22
Replies in CAPS:

Quote from @Chris Seveney:

@Tim Silvers

Wow this is interesting and have never seen this. Several questions ring in my head (putting my note investing thinking cap on).

1. Are you the owner? YES

2. Was there title insurance on the property ? YES

3. When was the 1st originated and the 2nd originated? AT SAME TIME - BOTH LOANS WERE ORIGINALLY WITH COUNTRYWIDE WHICH FAILED AND THE LOANS WERE THEN SOLD OFF TO SEPARATE LENDERS.

4. Has the 1st ever been defaulted upon NEVER

5. Was the 2nd ever in default? YES, WHICH IS HOW WE WERE ABLE TO GET THE 2ND EXTINGUISHED (PAST THE 10-YEAR STATUTE)

A lot of unknowns but if it’s your loan request a qualified written response. ALREADY DID. LETTER FROM BOA IS IN THE LINK I POSTED ABOVE.

I can see your frustrations but if the 1st had to get legal counsel to protect its interest including responding to a quiet title then more than likely they have a claim to charge the fees. CORRECT, HOWEVER, AGAIN, THE 1ST LENDER WAS NOT NAMED IN THE COMPLAINT.


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Tim Silvers
  • Las Vegas, NV
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Tim Silvers
  • Las Vegas, NV
Replied Jul 11 2022, 12:25
Quote from @Peter Walther:

Unless the 1st lien holder was named in the QT action it had no business spending money appearing in the litigation.  I suspect you are not the Borrower and unfortunately, I believe only the Borrower can successfully object to the charges being added to the loan balance.

I am the borrower and have already called BOA and made it clear they were not named in the complaint. They then sent a letter (posted in the link in my above post). Attorney is writing a letter to reiterate my objection, but feel BOA will rely on the DOT language.

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Tim Silvers
  • Las Vegas, NV
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Tim Silvers
  • Las Vegas, NV
Replied Jul 11 2022, 12:27
Quote from @Jonathan R McLaughlin:

@Tim Silvers 2k would be consistent with the cost due diligence in connection with the second mortgage and it’s implications

There was no reason for them to hire attorneys for due diligence since they were never named in the complaint to begin with so there were no implications to them. But I understand what you're saying and I fear they will just default to relying on the boiler plate blanket language in the DOT. The cost to bring a complaint against them would exceed the cost of their legal fees and they know that. It's a scam.

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Peter Walther
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Peter Walther
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Replied Jul 12 2022, 12:20
Quote from @Tim Silvers:
Quote from @Peter Walther:

Unless the 1st lien holder was named in the QT action it had no business spending money appearing in the litigation.  I suspect you are not the Borrower and unfortunately, I believe only the Borrower can successfully object to the charges being added to the loan balance.

I am the borrower and have already called BOA and made it clear they were not named in the complaint. They then sent a letter (posted in the link in my above post). Attorney is writing a letter to reiterate my objection, but feel BOA will rely on the DOT language.

 I'd be thinking about bringing a declaratory judgment action against BOA asking the court to declare it impermissible for BOA to add the expense to the loan principal.  Since the loan docs provide for the lender to get atty fees if it's successful in court, reciprocity says you should get yours if successful.

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Tim Silvers
  • Las Vegas, NV
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Tim Silvers
  • Las Vegas, NV
Replied Jul 12 2022, 13:33
Quote from @Peter Walther:
Quote from @Tim Silvers:
Quote from @Peter Walther:

Unless the 1st lien holder was named in the QT action it had no business spending money appearing in the litigation.  I suspect you are not the Borrower and unfortunately, I believe only the Borrower can successfully object to the charges being added to the loan balance.

I am the borrower and have already called BOA and made it clear they were not named in the complaint. They then sent a letter (posted in the link in my above post). Attorney is writing a letter to reiterate my objection, but feel BOA will rely on the DOT language.

 I'd be thinking about bringing a declaratory judgment action against BOA asking the court to declare it impermissible for BOA to add the expense to the loan principal.  Since the loan docs provide for the lender to get atty fees if it's successful in court, reciprocity says you should get yours if successful.

That's probably how we would proceed if BOA fails to rescind the charges, but it's a gamble and would cost me the same in legal fees (not including litigation) to sue them with no guarantee of a successful outcome. So, worst case, I wind up not only owing the $2K to BOA but another 2K+ in additional legal fees to my counsel.

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Peter Walther
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Peter Walther
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Replied Jul 13 2022, 10:17
Quote from @Tim Silvers:
Quote from @Peter Walther:
Quote from @Tim Silvers:
Quote from @Peter Walther:

Unless the 1st lien holder was named in the QT action it had no business spending money appearing in the litigation.  I suspect you are not the Borrower and unfortunately, I believe only the Borrower can successfully object to the charges being added to the loan balance.

I am the borrower and have already called BOA and made it clear they were not named in the complaint. They then sent a letter (posted in the link in my above post). Attorney is writing a letter to reiterate my objection, but feel BOA will rely on the DOT language.

 I'd be thinking about bringing a declaratory judgment action against BOA asking the court to declare it impermissible for BOA to add the expense to the loan principal.  Since the loan docs provide for the lender to get atty fees if it's successful in court, reciprocity says you should get yours if successful.

That's probably how we would proceed if BOA fails to rescind the charges, but it's a gamble and would cost me the same in legal fees (not including litigation) to sue them with no guarantee of a successful outcome. So, worst case, I wind up not only owing the $2K to BOA but another 2K+ in additional legal fees to my counsel.

 All too true.

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Tim Silvers
  • Las Vegas, NV
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Tim Silvers
  • Las Vegas, NV
Replied Jul 21 2022, 14:55

Update: Best I could get out of them was an address to send a letter requesting for the fees to be removed due to their error. They could or would not provide any breakdown or detailed accounting as to their fees, not surprisingly.