Senior lien remaining after trustee sale

6 Replies

I am looking at purchasing at trustee sale initiated by a junior lien. I understand the senior lien by law would have to accept payment if I have trustees deed.  I am looking for confirmation that in fact the first has to accept payment to get current for example and / or payment in full. Thanks 

Depending on the state, you're responsible for the total payoff including the entire outstanding balance, arrears and legal costs.  If the lender agrees, they may take a short payoff or the arrears portion and then you make payments.  

I don’t know of any law/regulation that requires them to allow you to simply bring the loan current, and make payments.  For one thing the borrower has “alienated title”, triggered the due on sale clause, if nothing else.  By law they Do have to give you a Pay Off, though they usually drag their feet. I’d plan on having to having to pay them off.

@Ron S. ??

yes I expect to have to pay it all off soon. Just wondering if they have to accept my payment to get current which then they would have to cancel notice of default assuming they started foreclosure on first.   If they accelerate payment then they would have to give me 30 days before starting foreclosure

The first lien holder has a contract with the original purchaser , not you .  They can demand payment right away . 

I wouldnt pay them to get " current "its not your loan . 

@Wayne Brooks   Spot on Wayne at least in areas I work..

1. title Is alienated lender at their sole discretion may accelerate all sums due.. that's standard verbiage 

2. don't believe you can force them take accept payments never seen that. (I although they may if they wish)

Its worth a shot like @Chad U. mentioned I have bought a few juniors in my day and negotiated with the Senior to keep payments current until such time as I could sell or refi.. 

I am thinking if these were owner occ though ( I mainly deal with non owner) and the new rules it could be tougher .

so I would plan on paying them off.. and if they have not filed a default then you just learn the time lines in that state and you know worse case scenario when you need to pay them off.

Originally posted by @Wayne Brooks :

I don’t know of any law/regulation that requires them to allow you to simply bring the loan current, and make payments.  For one thing the borrower has “alienated title”, triggered the due on sale clause, if nothing else.  By law they Do have to give you a Pay Off, though they usually drag their feet. I’d plan on having to having to pay them off.

@Ron S. ??

 Total agreement with you Wayne. I get a lot of these junior purchaser's sitting across my desk asking for the previous note, of the previous owner, on my existing senior lien, thinking that they are stepping in as the former owner (They aren't and I don't give them anything more than total debt payoff). I eagerly take any money they want to give me, but then hand them notice that I'm putting the loan into foreclosure if not paid off within 30 days.