I Took 3rd Position With My Mortgage-now What?
In June of 2003 I lent $11K to a man and his son to help them get some repairs done on their home in MA. I then recorded my mortgage in the registry of deeds. I knowingly took a 3rd position mortgage behind a 1st of $237k and as small second of $3K. I was reciving 15% int and payments of $200/mth. The loan contained a balloon feature to mature in Aug 2004. I felt comfortable with this because I was still at only about 78% total LTV. Here's what happened next. He stopped paying me in Oct 2003 and that was fine because I knew he had equity and I would get paid eventually when he sold or refinanced his home. In March of this year I did a follow-up title search just to see if any tax liens had hit title. Here's what I found. Somehow in Dec of 03 he had been able to refinance his home with a subprime lender for 256K and they paid off the former 1st and 2nd leinholders. No one-including the borrowers ever tried to contact me to get payment history or a payoff or anything and I did not get paid off. I thought they must have just missed me on the title search and only thought there were the 2 mortgages. Now I am in first place. I now have a first mortgage of 11K on a home that is worth about 320K. I also know that lenders require title ins to be purchased by the borrower to guarantee their lien position. So I contacted the attorney that did the closing and notified them that they missed my lien. I did this since I figured that they would just suck it up and pay me off since they missed me in their search. I faxed them a copy of the mortgage and the book and page info to locate my lien in the public record. They said they would check it out. Meanwhile, I also contacted the legal department of the lender and told them that they were not truely in 1st place and that I was about to foreclose on my non-performing note. They told me that I would hear from them after they validated my claim. Two days ago I get a call from this attorney in Boston claiming he represents the lender. He says that indeed they missed my lien and they wanted me to subordinate. I said you got to be kidding. On a side note-this new loan that was done in Dec was a 2 year arm @ 9.75% and it replaced a great loan which was a 5 year arm with 4 to go @5.75%. I was willing to be behing the original loan because the payments were reasonable. I would not want to be behind this loan regardless of CLTV. Anyways the attorney says that if I will not willingly subordinate, he can sue me in court under the doctrine of equitable subrogation. He is telling me that it is not fair that I should not be able to benefit (being in 1st place a a lower ltv) from someone elses mistake and that the court would see this his way. I totally don't see how this would be fair to me. I had a recorded mortgage-correctly indexed-that was recorded way before this Dec lien and they think I should now be behind them. Is this this guy trying to intimidate me or is this for real? I mean if they had done a proper search this refinance loan would not have been possible because at the time they did it the borrowers were 60days behind to me. I have not talked to an attorney but I plan to real soon. What do you all think?
It is amazing that i've learned two amazing things today; one of which is the principal of equitable subordination. I did some limited research and although I do not have much knowlege on that claim I do have knowlege in the sort of thing you are experiencing.
It is quite clear to me that the lender is very worried that their large interest is not as secure as they want. You can likely foreclose and will get paid all fees that you can add into it. You can offer to sell your mortgage to the bank at a higher price potentially.
My first call would be to an attorney. He/she should start foreclosure proceedings. I am confident you will be paid--worst case at the sheriff's sale. I'm sure you can find an attorney willing to take the deal and have you pay him when you get paid because he/she can all but guarantee you will get your money.
No worries. Play hardball and maybe you can make more money than you thought you could!
CONTRATS OF THE DEAL!!
Hi, sent you a Private message too...but looks to me like you are the card holder here for sure.
I would call their bluff it were me.
Give your att. gen. office a quick call.
Best wishes,
the Bride
They screwed up& are blowing smoke, call their bluff. That's why they have insurance when they screw up.
I totally agree that you should stand tough right where you are.
And if you're not paid as per your note, begin foreclosure immediatly.
You'll get paid in full & it's not going to take very long...probably by the title ins. co. that screwed up & they'll then sue the owner who probably lied to them when he applied for his newest loan, "forgetting" to tell them about the note you hold.
Meanwhile don't talk to any of them on phone and don't communicate with any of them except debtor to tell him he either stays current on your debt or you're foreclosing.
Quote:
On 2004-04-30 00:03, dirtman89 wrote:
In June of 2003 I lent $11K to a man and his son to help them get some repairs done on their home in MA. I then recorded my mortgage in the registry of deeds. I knowingly took a 3rd position mortgage behind a 1st of $237k and as small second of $3K. I was reciving 15% int and payments of $200/mth. The loan contained a balloon feature to mature in Aug 2004. I felt comfortable with this because I was still at only about 78% total LTV. Here's what happened next. He stopped paying me in Oct 2003 and that was fine because I knew he had equity and I would get paid eventually when he sold or refinanced his home. In March of this year I did a follow-up title search just to see if any tax liens had hit title. Here's what I found. Somehow in Dec of 03 he had been able to refinance his home with a subprime lender for 256K and they paid off the former 1st and 2nd leinholders. No one-including the borrowers ever tried to contact me to get payment history or a payoff or anything and I did not get paid off. I thought they must have just missed me on the title search and only thought there were the 2 mortgages. Now I am in first place. I now have a first mortgage of 11K on a home that is worth about 320K. I also know that lenders require title ins to be purchased by the borrower to guarantee their lien position. So I contacted the attorney that did the closing and notified them that they missed my lien. I did this since I figured that they would just suck it up and pay me off since they missed me in their search. I faxed them a copy of the mortgage and the book and page info to locate my lien in the public record. They said they would check it out. Meanwhile, I also contacted the legal department of the lender and told them that they were not truely in 1st place and that I was about to foreclose on my non-performing note. They told me that I would hear from them after they validated my claim. Two days ago I get a call from this attorney in Boston claiming he represents the lender. He says that indeed they missed my lien and they wanted me to subordinate. I said you got to be kidding. On a side note-this new loan that was done in Dec was a 2 year arm @ 9.75% and it replaced a great loan which was a 5 year arm with 4 to go @5.75%. I was willing to be behing the original loan because the payments were reasonable. I would not want to be behind this loan regardless of CLTV. Anyways the attorney says that if I will not willingly subordinate, he can sue me in court under the doctrine of equitable subrogation. He is telling me that it is not fair that I should not be able to benefit (being in 1st place a a lower ltv) from someone elses mistake and that the court would see this his way. I totally don't see how this would be fair to me. I had a recorded mortgage-correctly indexed-that was recorded way before this Dec lien and they think I should now be behind them. Is this this guy trying to intimidate me or is this for real? I mean if they had done a proper search this refinance loan would not have been possible because at the time they did it the borrowers were 60days behind to me. I have not talked to an attorney but I plan to real soon. What do you all think?
Hire an Attorney he should be willing to take the case with no advance fee. You have an action against the Title Co. The new Lender and of course the Property Owner who contributed to the fraud.
You will probably be paid off by the Title Co. cause they insured the title. For the life of me I cannot see how they missed your mortgage, unless there was a deliberate attempt. You have been damaged, you have been placed in harms way. A simple action. The other attorney is just earning his fee by sounding off with bluster and drums. It has no weight or meaning. Stay quiet do not talk to anyone but your attorney. I would assume there might be a damage award if it ever got to trial which it wont. Title company would not allow it.
Enjoy, Lucius Yes I have collected on such an event. Rather similar too.
Find yourself a good attorney. Allow me to define good in this situation.
Find a guy who knows real estate work. Who you would like to use in the future. Allow him to charge you an all-in fee of $15,000 to pursue this matter to be paid when you get paid. Add his fee to your claim and file suit for $26,000. Have a side agreement that the fee drops back to the hourly rate if he collects less than the $26,000. Even if the borrower is not currently late I'd file the suit on the grounds that the refinance breached your agreement.
Be sure you name the title company as an additional defendant.
The attorney is not allowed to refund to you any fee he collects in excess of your judgement. But he can, out of the gratitude of his heart, agree to do additional work on other matters for you at no additional charge.
You've now increased your claim to the point that it is interesting. You've got your legal fees covered and you've showed Mr. Boston attny that you are not going to be intimidated.
My guess is that your attny's phone will ring pretty quickly with a settlement offer.
By the way, would you like to sell your note at a discount and avoid the hassle of foreclosing?
[ Edited by commercialking on Date 04/30/2004 ][ Edited by commercialking on Date 04/30/2004 ]
I would have to agree with Lufos, I've seen this a couple of times with home improvement loans. That is why the title company has E&O Insurance. I would not deal with the bank at all. It is not their responcibility, they also should be having issues with the title company.
Good Luck
Lori
[addsig]
Commercialking,
Great suggestions. It lets the person with the note pick two paths. Take action now and get some extra work done as a side benefit. OR, sell the note knowing that the note should be worth the face amount as the foreclosure costs could be ignored because you can find a lawyer to work the case on a performance basis.
John
Quote:
On 2004-04-30 08:41, commercialking wrote:
Find yourself a good attorney. Allow me to define good in this situation.
Find a guy who knows real estate work. Who you would like to use in the future. Allow him to charge you an all-in fee of $15,000 to pursue this matter to be paid when you get paid. Add his fee to your claim and file suit for $26,000. Have a side agreement that the fee drops back to the hourly rate if he collects less than the $26,000. Even if the borrower is not currently late I'd file the suit on the grounds that the refinance breached your agreement.
Be sure you name the title company as an additional defendant.
The attorney is not allowed to refund to you any fee he collects in excess of your judgement. But he can, out of the gratitude of his heart, agree to do additional work on other matters for you at no additional charge.
You've now increased your claim to the point that it is interesting. You've got your legal fees covered and you've showed Mr. Boston attny that you are not going to be intimidated.
My guess is that your attny's phone will ring pretty quickly with a settlement offer.
By the way, would you like to sell your note at a discount and avoid the hassle of foreclosing?
<font size=-1>[ Edited by commercialking on Date 04/30/2004 ]</font>
<font size=-1>[ Edited by commercialking on Date 04/30/2004 ]</font>
Call the bluff
sit on it let it accrue interest, at 15% you'll make a nice chunk of change.
wow....this just happened to me.
Its kind of nice when the big dogs screw up? Its a major title company issue and they are liable for not catching the lien. Its the title companies responsibility to get rid of your lien and clear title for the lender because of their title insurance lenders policy. The difference this time around is that you control and the ball is in your court. Dont settle for your Deed of Trust amount. Claim lots of damages. Their lawyer is full of crap. I would tell him that... (but, thats just me) I would tell him to go talk to his clients title insurance.
The other iteresting thing I found out is that when the borrower refinanced, did you know its also their responsibilty to disclose any liens or any title issues they might know about? The title insurance company could go after the borrower for the amount of the claim ..... Justice will be served.....