2nd mortgage foreclosure.
Member since 2023 · 8 posts · 0 votes
2nd mortgage foreclosure.
Most Popular Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votesQuote from @Rami Latif:
how about filing a motion for a temporary restraining order (TRO) and preliminary injunction to enjoin (stop) a foreclosure sale?
your grasping at straws. contact senior lender or trustee if you can, tell them your a junior in possession and ask them to post pone the sale for 90 to 120 days so you can do a refinance on it.. As a junior in possession they may work with you. 86k is not enough to do a BK over that would really hurt you going forward. worse that comes out of it is you know their position. its possible though that the property will bid higher than the 600k . if it goes to sale make sure you attend and watch the action very closely make sure bidders that qualify checks are not talking to each other and making side deals so the property only goes for minimum bid and you get nothing.. this is called colluding to stymie open bidding and in some markets it quite common. IF you see that happen or suspect it then you can raise holy hell with the authorities.
30 Replies
- Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes2y
@Rami Latif - they might extend it if you need more time to come up with the cash
Second City Real Estate4.821 Reviews - Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes2y
Id say it sounds like your position is about to get wiped out. Hopefully you didnt pay much for this note?
@Chris Seveney this is your area of expertise
District Invest Group546 Reviews - Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes2y
Quote from @Russell Brazil:
Id say it sounds like your position is about to get wiped out. Hopefully you didnt pay much for this note?
@Chris Seveney this is your area of expertise
Thanks Russell.
If you do not have the funds, then you will be mercy of the foreclosure auction and hope someone bids more than what is owed on the first and you would get the overage.
I guess my questions are:
1. What is the property worth?
2. What is the total payoff on the first?
3. What is reinstatement of the first? (you could try and reinstate to delay foreclosure)
4. What did you bid at auction?
5. What state is this in?
7e investments53 Reviews - Member since 2023 · 8 posts · 0 votes2y
The property worth about 800,000
The first lien is 600,000 this total payoff
The second lien was 86,000 (this one I was the highest bidder)
The deed just got recorded yesterday and I just found out that the first lien going for trustee sale this month Nov 27.
Im not investor I was just following California law SB 1079 as prospective owner occupant that I can bid after foreclosure which I did.
I hope the first lender can will agree to refinance the loan and I will carry the loan and pay monthly.
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes2y
@Rami Latif
Very unlikely, the lienholder will refinance before the foreclosure,
what will happen is it will sell at auction and hopefully will sell for more than what the first is owed plus what you’re also owed.
anything over the 600,000 will go to you unless there are other taxes or penalties associated with the property .
Good luck
7e investments53 Reviews - Investor · Member since 2023 · 118 posts · 61 votes2y
A refinance at this point is extremely unlikely, mainly because of the short timeline.
I would request a reinstatement quote. With this info in hand you can determine if it makes sense to move forward or call it a day. The foreclosing trustee might be able to help you. This isn't like a court battle where everybody has their back up against the wall ... trustee and lender may be willing to work with you.
As the property owner you have the right to protect your interest by reinstating the existing loan, that's not to say the lender, after reinstatement, can't start a new foreclosure based on a violation of the due-on-sale clause, but may not. I forget the number right now but if you are within I think 5 days from sale date the lender isn't obligated to reinstate, but still may.
You may be able to delay the foreclosure by simply asking for more time, you are now the property owner and have some sway.
A couple observations:
You don't have title insurance as no title company will insure a trustee's deed in CA, so that won't help you.
You won the auction based on your commitment to occupy the property (SB1079), so this is not a quick flip.
To buy time and delay foreclosure you can file a stripped down bankruptcy.
You can't stop payment on the 86k wining bid since you paid cash at the trustee sale.
Generally trustee sale buyers don't have a real good feeling for the property condition, unless you do for some reason, so this is a wild card. The after auction bid process may have given you time to do a good property inspection ... or maybe you live in the property now.
Sorry you're in this situation!
- Member since 2023 · 8 posts · 0 votes2y
Would it be worth it to look for other lenders to pay it off? With only 2 weeks left maybe it's hard to get new loan and pay it off.
- Member since 2023 · 8 posts · 0 votes2y
how about filing a motion for a temporary restraining order (TRO) and preliminary injunction to enjoin (stop) a foreclosure sale?
- 2yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Rami Latif:
how about filing a motion for a temporary restraining order (TRO) and preliminary injunction to enjoin (stop) a foreclosure sale?
your grasping at straws. contact senior lender or trustee if you can, tell them your a junior in possession and ask them to post pone the sale for 90 to 120 days so you can do a refinance on it.. As a junior in possession they may work with you. 86k is not enough to do a BK over that would really hurt you going forward. worse that comes out of it is you know their position. its possible though that the property will bid higher than the 600k . if it goes to sale make sure you attend and watch the action very closely make sure bidders that qualify checks are not talking to each other and making side deals so the property only goes for minimum bid and you get nothing.. this is called colluding to stymie open bidding and in some markets it quite common. IF you see that happen or suspect it then you can raise holy hell with the authorities.
- Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes2y
I believe that the cost of every legal hoop you make the Trustee jump through to complete the foreclosure will be added into the amount owed and will reduce any possible overage from the sale of the property.
In addition, unless there is a fatal defect in the deed of trust, the sale is going to go through and a request for a TRO (which I doubt would be granted) or filing Bk (which I'm not sure would stop the sale since you're not the borrower, have no liability for the debt, your interest arose after the foreclosure began and you had knowledge of the 1st DOT's foreclosure) will not stop it. Also, a Bk filing might be in bad faith if the sole reason for it is to delay the foreclosure. I suspect an Bk attorney would advise you that you don't qualify for a BK.
I suggest you consult with a very good real property attorney, preferably one who practices in the area the property, or better yet the foreclosure Trustee is located. If your attorney knows the Trustee or the Trustees attorney, you might get better traction on a request for a delay. I believe you will need a very good reason for why it should be delayed with an explanation as to how it will benefit or at least not cause additional harm to the Trustee's beneficiary. The mere fact that you might be harmed by the sale going forward will not sway them. Good luck.
- Wholesaler, Rehabber and Landlord · San Antonio, TX · Member since 2014 · 2k+ posts · 2k+ votes2y
I would definitely talk with the trustee and let them know that you just bought the 2nd and you want to catch it up. Ask them how much. Go borrow on a line of credit or get a friend to lend you some money to catch it up. Start paying on the 1st. NOW you have time to refinance after the loan is not in default anymore.
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes2y
@Jay Hinrichs
I agree. Comments about having a trustee contact the lender, 95 out of 100 times the lender would not even respond within 30 or 60 days to the trustee. Trying to get an institution to reply and comment in a timely fashion is comical.
If it’s a private lender, why would they wait when they’re getting paid off.
As an example if your house was going to sell in two weeks for full price, and some random person came up to you and said I really want this house but I need six weeks to get you the money. Would you cancel the sale to give that other person six weeks? Of course you wouldn’t.
Original poster needs to show up at the auction and bid . spend your time finding a private lender or somebody to give you the money to bid. Otherwise you’re at the mercy of other bidders, hoping it gets bid up.
7e investments53 Reviews - Paradise, CA · Member since 2015 · 1k+ posts · 871 votes2y
Quote from @Rami Latif:
Would it be worth it to look for other lenders to pay it off? With only 2 weeks left maybe it's hard to get new loan and pay it off.
This could be an $86K lesson learned because you didn't want to pay $400 for a prelim before you bid. If you tendered your cashier's check during the 45 day period, that money is gone. if you in the 45 day period, don't walk, run. 1079 is non binding until you stroke that check.
Contacting the trustee for help is a waste of time. Contacting the trustee to give a message to the lender (The foreclosing entity) is the only thing they are going to do but, ultimately, that's a waste of time as well. They (The lender) aren't going to refinance you and have no incentive to work with you, nor any requirement to do so.
I think you have other confusion to clear up as well. You said, "They recorded the deed...". No one recorded any deed in a foreclosure, unless the sale happened, and then it would be a trustee's deed upon sale and if that happened, all this conversation is for naught. You probably meant, "they recorded the notice of default". If you mean that, you have 4 months to find financing or you lose your money. If you mean they recorded the notice of sale, um, yeah, you have less than 21 days before the sale.
I'd sell my equity position if I were you if it was worth selling, and if you couldn't arrange for a loan to pay off the senior before their sale. Someone could get a slight deal if its really worth $800K.
Other Observations:
Filing a BK isn't going to do anything except destroy your credit. The foreclosing entity will file a motion for relief, get it granted, and after you bought 30 days in exchange for destroying your credit, they go to sale anyway. Also, filing the BK eliminates any chance of you financing a loan to pay the 1st so, whoever gave you that advice, run from it.
1079 making this "not a quick flip" is not relevant to anything whatsoever...so ignore that comment and anything else that person said in his post.
There is not enough meat on the bone for a hard money lender in my opinion and if you are facing sale in two weeks, they are your only option if you don't have a 401K or IRA you can tap into or other access to funds.
- Member since 2023 · 8 posts · 0 votes2y
Here is an update.
I got notice of trustee upon sale and I went to the county and I recorded the trustee sale. I sent a copy of it to the senior lien trustee and requested reinstatement to cure the default. I'm going to send cashier check of $28000 so the foreclosure for the senior lien would be canceled. Now I need to figure out how to deal with this loan.
Is it better to sell before they start new foreclosure process or just refinance it?
- Paradise, CA · Member since 2015 · 1k+ posts · 871 votes2y
Quote from @Peter Walther:
I believe that the cost of every legal hoop you make the Trustee jump through to complete the foreclosure will be added into the amount owed and will reduce any possible overage from the sale of the property.
In addition, unless there is a fatal defect in the deed of trust, the sale is going to go through and a request for a TRO (which I doubt would be granted) or filing Bk (which I'm not sure would stop the sale since you're not the borrower, have no liability for the debt, your interest arose after the foreclosure began and you had knowledge of the 1st DOT's foreclosure) will not stop it. Also, a Bk filing might be in bad faith if the sole reason for it is to delay the foreclosure. I suspect an Bk attorney would advise you that you don't qualify for a BK.
I suggest you consult with a very good real property attorney, preferably one who practices in the area the property, or better yet the foreclosure Trustee is located. If your attorney knows the Trustee or the Trustees attorney, you might get better traction on a request for a delay. I believe you will need a very good reason for why it should be delayed with an explanation as to how it will benefit or at least not cause additional harm to the Trustee's beneficiary. The mere fact that you might be harmed by the sale going forward will not sway them. Good luck.
I like your post. Not sure i agree about them adding for legal hoops though. There aren't any legal hoops to add to the amount owed in a non judicial foreclosure as their fees are set. If this ends up in court, that's a different situation of course. Still not sure that would be added to the debt amount though. It could but I get mixed results when i try to add fees in adversarial hearings. That said, if it ends up in court, he has no standing or cause to bring to the court so, i'm sure it would be only for a short period of time.
Also, a BK would absolutely and immediately stop the sale, bad faith or not. The sale would resume in 30 days or so but it would stall it for sure.
- Paradise, CA · Member since 2015 · 1k+ posts · 871 votes2y
Quote from @Rami Latif:
Here is an update.
I got notice of trustee upon sale and I went to the county and I recorded the trustee sale. I sent a copy of it to the senior lien trustee and requested reinstatement to cure the default. I'm going to send cashier check of $28000 so the foreclosure for the senior lien would be canceled. Now I need to figure out how to deal with this loan.
Is it better to sell before they start new foreclosure process or just refinance it?
That's up to you...
- Member since 2023 · 8 posts · 0 votes2y
I heard someone said that I can't sell because I can't get title insurance. Is that true?
- Paradise, CA · Member since 2015 · 1k+ posts · 871 votes2y
Quote from @Rami Latif:
I heard someone said that I can't sell because I can't get title insurance. Is that true?
why can't you get title insurance. You should have a Trustee's deed upon sale when you won the auction and you took title subject to the senior lien. If you sell the property, that would all show on the prelim so, why couldn't you get a policy showing both your position and the senior lien position being taken out with a new buyer's loan? Title insurance is for unknown issues. If you know the issues, are deal with them, they aren't issues that would title.
- Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes2y
Quote from @Ron S.:
Quote from @Peter Walther:
I believe that the cost of every legal hoop you make the Trustee jump through to complete the foreclosure will be added into the amount owed and will reduce any possible overage from the sale of the property.
In addition, unless there is a fatal defect in the deed of trust, the sale is going to go through and a request for a TRO (which I doubt would be granted) or filing Bk (which I'm not sure would stop the sale since you're not the borrower, have no liability for the debt, your interest arose after the foreclosure began and you had knowledge of the 1st DOT's foreclosure) will not stop it. Also, a Bk filing might be in bad faith if the sole reason for it is to delay the foreclosure. I suspect an Bk attorney would advise you that you don't qualify for a BK.
I suggest you consult with a very good real property attorney, preferably one who practices in the area the property, or better yet the foreclosure Trustee is located. If your attorney knows the Trustee or the Trustees attorney, you might get better traction on a request for a delay. I believe you will need a very good reason for why it should be delayed with an explanation as to how it will benefit or at least not cause additional harm to the Trustee's beneficiary. The mere fact that you might be harmed by the sale going forward will not sway them. Good luck.
I like your post. Not sure i agree about them adding for legal hoops though. There aren't any legal hoops to add to the amount owed in a non judicial foreclosure as their fees are set. If this ends up in court, that's a different situation of course. Still not sure that would be added to the debt amount though. It could but I get mixed results when i try to add fees in adversarial hearings. That said, if it ends up in court, he has no standing or cause to bring to the court so, i'm sure it would be only for a short period of time.
Also, a BK would absolutely and immediately stop the sale, bad faith or not. The sale would resume in 30 days or so but it would stall it for sure.
I believe if the OP files a request for a TRO the Trustee will be named as the Defendant and will need to retain an attorney to respond. The cost of the attorney will be added to the Borrower's debt and will increase the amount of the final judgment. Since the value of the property should remain static at best and might actually decrease over the time involved and the highest bid amount probably would not increase, any overage going to the OP will decrease. I also believe that for a TRO to be granted the Plaintiff must show a meritorious defense against the foreclosure and a likelihood of prevailing. I doubt the OP will be able to meet either requirement.
As I understand it, personal bankruptcy is reserved for people who are insolvent or on the road there. It is not intended for stopping a legal proceeding because you may have made a bad business decision. In addition, bankruptcy stops all creditors from proceeding against the bankrupt. The Trustee is not proceeding against the OP but against the property, the Borrower and subordinate lien holders. Now I guess the OP could make the argument he stepped into the shoes of the 2nd DOT holder but I'm not sure that works when you obtain title via a Trustee's Deed since there are no warranties. Even if the bk is successful in stopping the sale, the Trustee is going to have to hire an attorney to appear in the bk and then you get into the problem with the reduction in equity described above.
I stand by my belief that neither tactic is a useful tool in this situation.
- Investor · Salt Lake City, UT · Member since 2019 · 339 posts · 126 votes2y
Not sure who is in 1st position but maybe catch up the payments and deed in lieu of foreclosure and wrap it hoping it doesn't trigger due on sale then sell it on market.
- Investor · Member since 2023 · 118 posts · 61 votes2y
Quote from @Rami Latif:
Here is an update.
I got notice of trustee upon sale and I went to the county and I recorded the trustee sale. I sent a copy of it to the senior lien trustee and requested reinstatement to cure the default. I'm going to send cashier check of $28000 so the foreclosure for the senior lien would be canceled. Now I need to figure out how to deal with this loan.
Is it better to sell before they start new foreclosure process or just refinance it?
I think you are saying you received the trustees deed upon sale, and recorded? If so, you are now the owner. Somehow you got a reinstatement quote, otherwise how would you know to send the 28k to senior lender to reinstate. How you got the reinstatement info (by contacting trustee or lender) was not ultimately a waste of time.
Having said that, before now putting more money into this deal ($28k), you need to look closely to see if it makes financial sense to do so.
Assuming it does, your question regarding sell or refi before they foreclose needs a little more explanation than simply saying it's up to you. If you continue making payments on the 1st, they may do nothing and keep accepting payments. In which case you have time, maybe a lot of time.
No need to file a stripped-down BK since you now have reinstatement information and don’t need more time. This is a technique that temporarily stays the foreclosure. It’s an emergency filing that requires very little information and only stays the fc for a short period, most experienced trustee sale buyers are familiar with this technique. Questionable if it does anything to your credit as it is an incomplete filing with the bankruptcy court that is disregarded after a short period. Gives you time to do what you already did.
Since you bought the property using the owner occupant provision in SB1079, you need to occupy the property for at least a year, so no quick flip. This influences your next step … stay with current first loan, bring in partners and payoff, refinance, assume. Private/hard money likely isn’t the answer since they don’t lend to owner occupants. Unless you can find somebody that isn’t concerned about all the regulations surrounding consumer loans … not suggested.
If you didn’t receive the trustees deed and record, my comments don’t apply.
- Paradise, CA · Member since 2015 · 1k+ posts · 871 votes2y
Quote from @Ryan Davies:
Not sure who is in 1st position but maybe catch up the payments and deed in lieu of foreclosure and wrap it hoping it doesn't trigger due on sale then sell it on market.
its not a question as to whether a bankruptcy filing impacts one's credit or not. It emphatically does, without question, impact the filer's credit.
- Investor · Member since 2023 · 118 posts · 61 votes2y
Quote from @Rami Latif:
I heard someone said that I can't sell because I can't get title insurance. Is that true?
Title will not insure a trustees deed, that's true. It's not true that you can't sell, you can. And your buyer can get a owner's title policy. And, as owner, if you get a loan going forward your lender can get a lenders title policy. This has been well established for a long time.
- Member since 2023 · 8 posts · 0 votes2y
Thank you all for your help. I have learned a lot from your comments. I got reinstatement from the first lender trustee company and I already paid a total $25000 to cure the default of the first lien. Now the foreclosure is cancelled.
My next step is to negotiate with the lender to see how to deal with almost $600000 of line. I'm hoping to carry out the same loan with the same low interest rate. It's really hard for me to refinance with high interest rate. I will end up paying more than $4000/month.
- Member since 2023 · 12 posts · 3 votes2ythis is very interesting, i was not aware that a property can even have 2 mortgages and 2 forecloures, did they mention this at the auction? i am following the aution websites and they dont mention any of this, they just put a starting bid, did you find this all out after the fact?
Quote from @Rami Latif:
The property worth about 800,000
The first lien is 600,000 this total payoff
The second lien was 86,000 (this one I was the highest bidder)
The deed just got recorded yesterday and I just found out that the first lien going for trustee sale this month Nov 27.
Im not investor I was just following California law SB 1079 as prospective owner occupant that I can bid after foreclosure which I did.
I hope the first lender can will agree to refinance the loan and I will carry the loan and pay monthly.
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