need a payoff from property purchased at trustee sale
Investor · Fremont, CA · Member since 2010 · 46 posts · 9 votes
Hello,
We bought a property in CA at a trustee sale with an existing senior lien under the previous owner's name. Now my title company and are having difficulty in obtaining payoff amount. By standard, the serve company requires the lien holder's SS /loan # or authorization to release payofd. Even through I faxed over the trustee's deed upon sale, the reps won't understand or do not care, always give me the standard response. Shall I try different title company or have difficult strategy? By law, when i am on title, I am responsible for the lien, which should serves as an authorization. Right? are there any specific language in the mortgage or the law code to indicate such? The lien is delinquent, and I am offering to pay it off. where wont' they give to me? Talking to the rep at the serve company is like talking to a wall. They are not educated or do not care to be educated. Thanks for your response. Rachel
@Rachel Zhang Be mindful that your desire to payoff the loan is not as motivating to the lender as you might assume. While the lender wants to be paid, they don't have systems in place to allow a successor-in-interest to waltz in and make a payoff. What is in place is lots of liability issues.
In two cases I bought subject to senior liens where the lien holders would not provide me with the lawfully required beneficiary statements (Civil Code 2943 et seq.). In one case I made six separate demands, all 30 days apart. The penalty in the civil code to the lender for not complying within 21 days is $300. That's not enough of a penalty to create an incentive for complying, especially compared to the liability to the lender of accidentally providing loan info to someone other than the borrower. So in those cases I got authorization to release docs signed by the borrowers. I had to pay them though. Since you bought at foreclosure sale, the borrower may or may not be willing to cooperate. But it's worth a try and makes all the difference when working with the lender. You would have to find the borrower, explain the situation and arrange for payment in exchange for a signed authorization.
The other thing that worked was having the escrow officer use the lender/servicer's automated phone system. If you have the borrower's SS# and loan #, that may be enough to generate the payoff demand.
If the senior lien goes into foreclosure (after the notice of default is filed), I find the foreclosing trustee services to be better (and faster) than the lender at dealing with successors-in-interest. It may be because they have more experience with payoffs from buyers at trustee's sale. It's not ideal because once a lender files the NOD there will be additional fees. But you're looking at additional legal fees anyway if you have to hire an attorney to help you get the payoff.
@Dion - Thanks but, that's not a rule, just a proposal and while I think it's a great proposal, it still doesn't apply to the OP. She's not a successor in interest for the purposes of the proposal in your link. The borrower did not transfer ownership to her. Per the link, the definition is: “[o]ne who follows another in ownership or control of property.” Black’s Law Dictionary (9th ed. 2009). For the purposes of this proposal, the Bureau is referring to successors in interest who have been transferred a legal interest in a property securing a mortgage loan from a borrower on the mortgage loan; the successor in interest may not necessarily have assumed the mortgage loan obligation (i.e., legal liability for themortgage debt) under State law, and the servicer may not necessarily have agreed to add the successor in interest as obligor on the mortgage loan.
I think this is why attorneys exist. To extract money out of people who interpret things differently.
Ron,
While there is content which deals with that type of successor, it is not limited to that only. I realize the rule guidance is long. There is actually a ton of guidance on many different topics inside that guidance including but not limited to payment allocation, force placed insurance, bankruptcy responses, payoff demands and others topics as they related to the amendments of RESPA and TILA or Regulations Z and X which is what govern mortgage settlement and servicing.
Further, the guidance is issued and expected to be followed and has an effective date post publication. The rule will still be looked to and used in responses to those situations related to mortgage servicing, payment allocation and foreclosure avoidance. All of those do apply here.
Additionally, becoming a property owner by way of foreclosure sale and sheriff deed or certificate of title is an operation of law. The OP is a "Successor" by that operation of law. The OP follows in the same interest as the previous property owner since she has become the 'new' property owner.
The rule draws distinction among certain fields of data which may be available to certain parties while excluded to other parties.
A Mortgagee does not possess an equitable right to the property. They possess a legal right which grants them the capacity to foreclosure. The rule mandates foreclosure avoidance when possible. That would also apply in this case. The OP is planning to pay the loan in full which creates by definition an avoidance of foreclosure onto the borrower.
At this stage I am not sure what your real argument here is. Moral of the story as I have already stated, OP contact the CFPB they are the folks who you would complain to and can help when issues arise from mortgage servicing, which is what this exactly is. Good Luck.
Hi all,
I have good news to report. Finally the payoff amount is received with the help of all your inputs and civil code etc. Seterus Inc is a division of IBM and I googled and found the contact in the upper management and email her/him and got it sort out in 24 hours!
After the payoff with my own fund, I will do a cash- out refi with a new lender. The reason why the new lender can not payoff the existing lien is that the lien has NOT been paid during last 12 months. My title company will issue a title insurance for the new loan upon the reconveyance being recorded. It may take a while. What can I or the service company or the title co do to not let the reconveyance recoding get in the way? If the service company issues a letter indicating that the lien is paid off, can title company use it as a proof to issue the title insurance? The refi usually takes 30 to 40 days, Usually by that time, the reconveyance should be recorded. Right? I do not want to run out of the rate lock window. After all, it will be a smaller issue compared with the payoff demand.
Thanks again, everyone for staying with me with your comments, recommendations, especially @Dion Depaoli, @K. Marie Poe @Brian burke
There is no reconveyance. A Mortgagee does not own the property so they can not convey it. The Mortgagee can satisfy their lien by filing a satisfaction of lien with the county. The title company can pull that satisfaction from record once recorded and all should be good. The title company will issue a title commitment during your refinance which will condition the lien be satisfied. The new lender may not close until the lien is satisfied. If you are worried about rate lock expiring just do not lock your rate until you see the satisfaction recorded.
In our neck of the woods it is called a reconveyance. When the deed of trust and note are satisfied beneficiary completes an 'request for reconveyance', sometimes on the back of the deed of trust itself, and delivers request, note and dot to trustee who then records a deed of reconveyance.