Collateral as a private lender

[Kristian L.]

Hi. Can anyone recommend a foreclosure attorney? 

- Some of the questions I have: 
As a PML, what is the difference if I get collateral in an investment property or a primary residence. 
I hear that it can be harder to foreclose in a primary. 

- If I have a second lien, how to handle possible subordinate liens?

- If I have a second lien, how to handle first position?

- If I lend 50K normally a Deed of Trust is recorded in the amount of 50K. Can I get 500K recorded, even if the note is 50K? To discourage anyone getting subordinate liens.

[Ron S.]

Why would you care who is behind your lien? You have a bigger pool of potential allies if your borrower defaults, meaning, they may want to step up and negotiate to pay you off so they don't get wiped out. If the borrower defaults on them, they can foreclose but it would be subject to your lien.

You don't "handle" the first position. You record your lien (Without committing fraud by recording a false document) and then forget about them (The lienholder). If your borrower defaults on them, the senior lien holder will notify you if you properly recorded your lien. If they don't and you did your recording properly, they may have a defective foreclosure and your lien may survive.

You don't handle subordinate lien holders either outside of noticing them if you foreclose. 

Your first question is a valid question. The type of collateral matters in a default. It's not that its harder to foreclose, you just need to make sure if/when you do foreclose that you follow the procedures for a primary. Some procedures are state specific and some are federal but in general, there are more steps foreclosing on an owner occupied first lien position than others.