Confused On Subject To
Hi all I am a loan officer in Ca and I have come across a deal that I know nothing about. Well I should not say nothing. I have a general understanding of the subject to process. Heres the scenario
I have a client who has contacted me because she sold her house subject to about a year ago. There was a 1st and 2nd that were in place at the time of purchase. They also recorded a third in her name in the amount of 55,000. The 1st is 151,000 and the second is 49,000. The contract states that the buyer is to purchase for 307,000.
The 3rd was supposed to be paid a year after close which was feb of 08. The buyer did not fulfill this and has stopped making payments on her 3rd all together. He has still been making the 1st and 2nd payments
Because I am not knowledgeable in these types of transactions I am not sure what to recommend my client do. I have tried to contact the buyer to see if he wants to refi and pay off all liens but I am unable to reach him.
Any suggestions on her recourse?
Foreclose..
However there may need, because of a balloon payment, a notice given by the lender to the borrower 90-150 advanced notice of the loan being all due and payable before they can foreclose..
Depends on the time line of the note itself.
Foreclose on her third mortgage, subject to the first and second. Get the property back and sell it again, hopefully to a buyer that comes to the settlement table with cash and new financing to pay off the first and second.
Newkid,
Is there someone that would be able to help her do this? I am thinking that she is going to need to retain counsel.....
Yes, a foreclosure needs to be handled by an attorney whose practice includes this niche.
Where is the property located and how much is it actually worth TODAY?
Foreclosing on a THIRD position loan is not worth the cost and hassle if the property is only worth the total loan amounts.
CA is a non judicial foreclosure state and a Lawyer is not necessary.
Read the CA code of civil procedure at www.Findlaw.com and follow the procedures to a T. Remember, even if the foreclosure is successful, they would still need to evict and another party at the sale could end up with the property, but doubtful.
ALSO, this foreclosure on the 3rd (note) will alert the first position lender and they will likely invoke the due on sale clause, further complicating things.
This sounds like a messy situation and I would NOT want to be holding a 3rd on a CA property today.
Are the in Notice of Default? If so, you should read CA C.C 1695. Basically you could run into trouble if you let them remain in the property. As I understand it, you lease could be deemed a loan and you would have no basis to evict them if they defaulted. You could be risking all of the money you put into the deal. I understand it could get messy.
However with that much equity, it behooves you to find a solution. Perhaps the lease/option could be with a third pary instead of the original owners?
Perhaps a better route would be to purchase the mortgage from the lender and then for a repayment plan?
Just some ideas.
well I can lease option it to the daughter, she is currently not on the loan, would that do, or would family still be a problem? What options do I have, what would you do?
when you say purchase the mtg from the lender w/ a repayment plan. They are on a 8 or 9% loan thats adj. I really dont want that loan.
+ the people do not want to move out. they want to stay.
Any way to make that happen?
well thats the thing, the persons goal is to stay in the house. they dont want to move out if the can help it. Property is 45 mins from north hollywood, rents are like
Did you get my PM?
nope didnt get anything, can you shoot me an email at google. My email is vadimrubinstein at gmail
ok
Can you say equity stripping?
Ya, NO Kidding! This guy needs a Lawyer!
Here is the link to the article that I just found.
http://www.consumerlaw.org/news/ForeclosureReportFinal.pdf
Equity stripping, also known as equity skimming or foreclosure rescue, is any of various predatory real estate practices aimed at vulnerable, often low-income, homeowners facing foreclosure in the United States. Often considered a form of predatory lending, equity stripping began to spring up in the early 2000s and is conducted by investors or small companies that take properties from foreclosed homeowners in exchange for allowing the homeowner to stay in the property as a tenant. Most often, these transactions take advantage of uninformed, low-income homeowners. Because of the complexity of the transaction and false assurances given by rescue artists, victims are often unaware that they are giving away their property and equity. In recent years, several states have taken steps to confront the more unscrupulous practices of equity stripping. Although "foreclosure reconveyance" schemes can be beneficial and ethically conducted in some circumstances, many times the practice relies on fraud and egregious or unmeetable terms