General Money Judgement Vs. Trust Deed
I am purchasing a home that was in foreclosure. I was aware from the beginning of a 2nd trust deed held by the ex-spouse of the owner. The 2nd trust deed has now been sold, and the new owner has begun foreclosure. The original homeowner says the ex's 2nd was never a trust deed, was only a general money judgement, without the power of foreclosure to force sale. Anyone have any experience in this area? How does a judgement end up a trust deed? Thanks in advance.
The 2d either did or did not have a Deed of Trust securing it.
If it did not, then it's much more trouble for the creditor to sue, get J, then record the lien against the title....then he can start to enforce that lien.
This spells opportunity for you if you're wanting the property. Since the 2d holder is going to have big expense, he'll probably take big discount for some cash now from you.
And if you take the title before he records his J lien, that lien does NOT impact or cloud your title.
Who's foreclosing? 1st or 2d ? Again if 2d note isn't D/T secured, he can't foreclose.
So I suspect he's a little motivated to deal.
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According to the court transcripts, the judge was only awarding a "general money judgement" to the ex wife. The title prelim shows "A deed of trust to secure an original indebtedness of $...." I think it happened when the wife subordinated to allow them to refi the first mortgage, she got them to sign a trust deed agreement, then subordinated all at the same time. Looks like they didn't know what they would be doing by signing the trust deed agreement. It probably would still just be a lien without that paper. Doubt anything can be done now, one of those live and learn things for the previous owner, and I'll just have to deal with the foreclosure of the 2nd. He's already paid off the first which was in foreclosure when I found it, and now filed his own foreclosure. There's enough equity to take care of all of it, it's just a matter of paying now vs later. Wanted to have it sold before I had to pay the other liens. Now I might have to refi or come up with cash. Says he's willing to work with us, but I know he wants the house, so theoretically I could wait until the sale comes up, thinking he'll postpone, then he doesn't. Don't like taking that chance. Just have to get it in escrow quick! Thanks for the reply.
If the 2d note holder has paid off the 1st, then his 2d D/T is now 1st D/T, and his foreclosure will clearly wipe out the title owner.
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