Challenges with Second Trust Deed

[Alex Sinunu]

Looking for some clever ideas. 

I am trying to do a Second Trust Deed private loan in California. The borrower has credit union loans in first position. The covenants with credit unions are saying borrower can not add a loan in second position without written approval from the lender. 

Is there another route to take? Goal is to find strong collateral for the loan. 

Thanks

[Chris Seveney]

Quote from @Alex Sinunu:

Quote from @Beth Johnson:

Do they have other rental properties as collateral that you could use? The way the market is right now with higher cost of capital is local banks and credit unions are much more likely to be monitoring loans that fall out of compliance and calling them due. I'm hearing about it more and more these days. Less likely that a larger bank would take notice even if they have a provision prohibiting junior liens, as many of them do. You could consider getting a deed of trust signed and not recording it. I don't love that concept but it's better than a completely unsecured note. 

I was considering the unrecorded deed…thank you

 I would not do something unrecorded. Why? Because whose to say they do not have four other loans like yours or take out a second loan later on after getting the credit unions approval. Then you are SOL.