Junior Lien Issue On My Foreclosure Purchase...

57 Replies

I haven't looked at the complaint. As far as I know those aren't posted online. I can probably review that at the courthouse though, but will need to take off of work to do so, which is fine. You're right this probably should be my first course of action, I hand't considered it.

The lis pendens on the junior was closed by the court 'without prejudice for failure to prosecute'.

Kristine Marie Poe 

A quick google search came with this as the site for doing case searches in Nassau county.  You'll have to play around with it. You're looking for Civil (not criminal) Court Records, likely.   It will be easier with case no.s probably, but you may can search by name.  If it's similar to our county site, you can see all the events, motions filed, rulings, etc. in a particular case. you won't be able to see any pleadings or doc.s though.  I believe Dustin said the 2nd had a foreclosure/LP filed.  If so, and you actually go to the Clark's office, you can see the file, and it should have a principal balance being foreclosed upon in the Complaint.  This won't include accrued interest, fees, etc.

By the way, a trip down to the courthouse and reading the actual file, has saved my bacon a couple of times.  I've seen the first mtg start foreclosure, the second mortgage holder intervene, proceed to judgment with the Same case no. and Same case heading (1st mtg.  as listed Plaintiff) and the judgment/proceeding is for the Second mtg.!  Now, That's a trap!

http://www.nassauclerk.com/onlineaccess.cfm

@Wayne Brooks  

Thanks Wayne. This is actually for Duval county, but I'm familiar with their site as well. It's similar in that you see motions, etc but no docs. I will take some time on Monday to go down there and tackle this.

Missed that second bit you had there!!

Come on man I'm already having nightmares!! :P LOL

@Wayne Brooks  Thanks Wayne!

@Dustin DuFault  Keep an open mind.  LOTS can happen.  I once bought a deal from the heirs, got it all the way through probate and then title found a Medicaid lien during my re-sale escrow. No other title report had revealed this lien and this was back when we didn't have notify the state during probate. It turns out the heirs had agreed to pay the debt and signed a voluntary lien in their names with the dept. of health care services several years prior.  I had my attorney make a demand for the balance to see how bad the interest and late fees were on top of the principal. The state sent back a letter stating there was a zero balance and a copy of the lien release they had sent in for recording.  Asking around, my estate attorney found out that many of those liens were not unenforceable as heirs don't owe for decedent's Medicaid debt.  But it's not like the state had any automatic release process for the thousands of liens they had improperly recorded.  It was only going to get released if we asked for the balance.

So you just never know.....

Boy, there's just nothing like getting all torn up about a problem before you are certain that it's a problem. 

This is probably why Einstein said, 'You can't solve a problem from the level of the problem'.

I've had a number of problems in the future that I was afraid of (very few of which were valid). 

You are merely dealing with fear because you really and truly don't know the facts. What is unfortunate is that you are involving others in your reaction. 

I suggest you call "time out" and get the LP foreclosure complaint, read it and also get the lender's demand. Closing your eyes to the details and facts will teach you nothing and probably not conclude in favorable results. I suggest staying ahead of the problem from this point forward.

Well, the sting in any rebuke is the truth, Rick.

I will say that I was missing the fact that I could uncover the loan detail in the complaint at the courthouse, not having reviewed those records before. 

That clearly is my next step. Thanks everyone for their input.

Kristine Marie Poe 

Thanks for the encouragement, it is much appreciated.

Originally posted by @Dustin DuFault:

Well, the sting in any rebuke is the truth, Rick.

I will say that I was missing the fact that I could uncover the loan detail in the complaint at the courthouse, not having reviewed those records before. 

That clearly is my next step. Thanks everyone for their input.

To clarify, the loan balance in the complaint that was dismissed isn't necessarily the balance.  You have no way of knowing what arrangements or payments the borrower made.  For example, what if they stupidly paid off the 2nd, thinking that would stop foreclosure on the first.  I've seen that more than once. Seriously, some borrowers actually think by sending payment with their monthly coupon that the foreclosure will go away.  

Like I said, lots can happen.  Get escrow to make a demand for the balance and look at the court case.  You'll know more about what you are working with then.

Dustin - I, like most everyone here on this thread, are in your side. 

I look forward to reading your update after you've fully researched the facts and have regrouped. My vote is for you to make a big profit!

@Rick H.  

Thanks, I appreciate it. 

I will update on Monday with what I find!

Okay, updates as promised...

The LOC at the time of the junior foreclosure complaint was close to maxed out. $69k before fees, expenses, etc. So no easy news there. I've also asked the title company to make a payoff demand to double check.

More interesting and promising was that my, admittedly amateur, legal research over the weekend seems to indicate that in Florida the law provides a widespread use of a legal doctrine called 're-foreclosure'. Basically allowing subordinate liens to be added in after the fact on the original foreclosure case in order to close them out. This may be my saving grace in getting this resolved.

As a point of interest - the senior foreclosure complaint referenced the junior lien in a way that makes it appear the intent was to close it out --- they just didn't serve themselves. So it's really seeming at this point that this was an oversight on their part. Not sure what the implications of this will be - but I'm hopeful that will mean they are easier to work with in resolving things. Maybe I can get an easy lien release.

So my plan is...

-Get the lien demand back, and confirm that their is still a balance.

and then after advice from council...

-Possibly contact the bank directly to seek lien release since the law appears to allow me to add their lien interest onto the original action anyway, thus saving time / money / etc.

-Possibly file a re-foreclosure action as mentioned above.

@Dustin DuFault  

I've seen the "re-foreclosure" routine numerous times....but it was always when the first mtgee got it back at the sale, then when they went to sell it, a title search revealed a missed junior lien holder, similar to your situation.  They reopen, and amend the foreclosure.  I will be Very interested to see if a third party bidder would have "standing" in order to do this. PLEASE let us knows how this shakes out.

Originally posted by @Dustin DuFault:

Okay, updates as promised...

The LOC at the time of the junior foreclosure complaint was close to maxed out. $69k before fees, expenses, etc. So no easy news there. I've also asked the title company to make a payoff demand to double check.

More interesting and promising was that my, admittedly amateur, legal research over the weekend seems to indicate that in Florida the law provides a widespread use of a legal doctrine called 're-foreclosure'. Basically allowing subordinate liens to be added in after the fact on the original foreclosure case in order to close them out. This may be my saving grace in getting this resolved.

As a point of interest - the senior foreclosure complaint referenced the junior lien in a way that makes it appear the intent was to close it out --- they just didn't serve themselves. So it's really seeming at this point that this was an oversight on their part. Not sure what the implications of this will be - but I'm hopeful that will mean they are easier to work with in resolving things. Maybe I can get an easy lien release.

So my plan is...

-Get the lien demand back, and confirm that their is still a balance.

and then after advice from council...

-Possibly contact the bank directly to seek lien release since the law appears to allow me to add their lien interest onto the original action anyway, thus saving time / money / etc.

-Possibly file a re-foreclosure action as mentioned above.

Can you file a re-foreclosure as the property owner?  How could you be a plaintiff in a foreclosure when you are not the lender?

Agreed - this is confusing, which is why it's taken me a while to understand it myself!!

Here is a quote from a paper on re-foreclosure that explains it...

"The right to re-foreclose an omitted party passes with the title to the property. Therefore, the purchaser at the original foreclosure sale, as well as their successors, have the right to re-foreclose any omitted junior interest holders."

Source


I will believe it when I see it... but this does sound promising too me :)

Originally posted by @Dustin DuFault:

Agreed - this is confusing, which is why it's taken me a while to understand it myself!!

Here is a quote from a paper on re-foreclosure that explains it...

"The right to re-foreclose an omitted party passes with the title to the property. Therefore, the purchaser at the original foreclosure sale, as well as their successors, have the right to re-foreclose any omitted junior interest holders."


I will believe it when I see it... but this does sound promising too me :)

I answered my own question by reading the same article.  But it also says that as a reforeclosing owner, you are foreclosing on yourself and that the resulting judgment means pay the lender or the property will be sold at sale.  Why would anyone do that? 

The type of “right of redemption” being foreclosed in a re-foreclosure action determines the course of the litigation. If the right of redemption being foreclosed is that of an owner, then the re-foreclosure proceeds much the same as a traditional foreclosure action. The re-foreclosing plaintiff must prove its entitlement to a final judgment of re-foreclosure. The final judgment of re-foreclosure will require that the owner pay the entire indebtedness owed under the judgment within a time certain or otherwise, the property is sold at a judicial sale.

Kristine Marie Poe 

Check the next paragraph after your Quote...

"In comparison, if the “right of redemption” at issue is held by a junior mortgagee, then the property does not need to be resold at judicial sale. Once again, the re-foreclosing plaintiff must first prove its right to foreclose the junior interest. Then, the court can enter an order requiring the junior mortgagee to exercise its “right of redemption” within a time certain or otherwise have their right, title, interest, estate or claim eliminated from the property through entry of a final judgment. "

I think I'd be foreclosing on their right of redemption (which in this case is to pay off lien holder 1, and take first position). Since that would require more than lien holder 2's balance I cannot see them doing this... but I'm just pretending to know what I'm doing though :D:D

That does dovetail with what I saw in court one day, but didn't follow up on.  A third party bidder was trying initiate a "re-foreclosure" because of a missed junior lien holder in the original foreclosure.  From some quick searching, attorney opinions only-not the actual statute-this seems to be a viable approach.  Learnin' something new every day!

@Wayne Brooks  
I'll definitely keep you in the loop here. 

I much prefer to 'learn lessons' on BP than in real life! :-/

Hopefully I can get back to that soon.

Originally posted by @Dustin DuFault:

@K. Marie Poe 

Check the next paragraph after your Quote...

"In comparison, if the “right of redemption” at issue is held by a junior mortgagee, then the property does not need to be resold at judicial sale. Once again, the re-foreclosing plaintiff must first prove its right to foreclose the junior interest. Then, the court can enter an order requiring the junior mortgagee to exercise its “right of redemption” within a time certain or otherwise have their right, title, interest, estate or claim eliminated from the property through entry of a final judgment. "

I think I'd be foreclosing on their right of redemption (which in this case is to pay off lien holder 1, and take first position). Since that would require more than lien holder 2's balance I cannot see them doing this... but I'm just pretending to know what I'm doing though :D:D

Judicial foreclosure is confusing to me.  But I want it to be true for your sake that you can foreclose away a missed jr. lien on a property bought at trustee's sale.  That would definitely change the game in California.  Keep us posted.  

@Dustin DuFault  

I agree that I don't believe any action by the second, filing foreclosure, would affect your rights or procedures.  But, unless they'd be willing to settle for $5k or less, the reforeclosure shouldn't take that long.  While some of our courts are "backed up" the long foreclosure times are usually a result of inaction on the plaintiff's part.  Seems like it would be filing of the complaint, serving the second, waiting the 20 days, then set a hearing date.  Seems like it would be a one hearing deal, based on reforeclosing out their redemption rights, but maybe that's optimistic.  Please do send me his "opinion letter" for my own future reference.  My email is below.  Thanks.

@Wayne Brooks  

Thanks for your input; I did send that over.

I'm not popping any champagne bottles yet, but I am hopeful this will be resolved soon :D

If it is a small second just pay it.

Joe Gore

Thanks Joe.... it's not, unfortunately. 

I'm still hopeful about making an appeal to the bank and getting a lien release... seems like it would be in their best interest be done with it.

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