Posted by John Merchant on April 07, 2010 at 12:59:01:
As the managing principal in an active DOT (deed of trust)Foreclosing Trustee co. in a DOT state (WA) I can tell you that here, a suit to restrain such a non-judicial foreclosure on any DOT would be difficult to maintain.
Why?
Because of the WA statutory requirement that the borrower-in-default would have to post a bond that’s effectively unlikely to happen because it requires some financial strength the B just normally doesn’t have…that bond would require his bringing the DOT secured note current plus posting an amount of bond that would cover all court costs, late penalties, delinquent taxes, attorneys fees, etc.
And here, unless that B does sue to restrain the foreclosure, he’s waived his right to defend a suit for deficiency J that could follow the foreclosure (on commercial, Non OO loans only)and is therefore barred from suint the foreclosing creditor/lender.
Our laws on DOT Foreclosure are, I suspect, much like the other DOT non-judicial foreclosure states’ in that they were written for banks and other institutional lenders and are greatly in lenders’ favor.
What this means is IF the 1st DOT secured lender does commence a DOT non-judic foreclosure, based on its allegations that Borrower defaulted in ANY way, that B had better be prepared to either get it paid off or suffer foreclosure.
Posted by Amotoxracer on April 05, 2010 at 22:12:05:
If a borrower signs mortgage “A” encumbering a property and at a later date adds another borrower to both the deed and an additional mortgage “B” - then mtg A agrees to subordinate to mtg B - Would the subordination prevent mtg “A” from foreclosing on the intrest of both borrowers and taking poseession of the poperty?? or would it not matter.
Re: Lender A does not normally OK loan B - Posted by Amotoxracer
Posted by Amotoxracer on April 06, 2010 at 17:42:59:
In this instance lender A did make such an agreement.
Which is why im asking the question weather or not the subordination causes problems foreclosing on the intrest of both borrowers.
At this point i believe that under normal circumstances lender A would demand to be paid off and then consider taking a second position with both borrowers signing a new second lein instead of subordinating their existing lein that only had one borrowers signature.
All this begs the question why does it matter ??
Answer is because i believe that lender A agreed to subordinate their lein because they were unaware that a stranger to the title was added at the same time lender B funded the next mortgage. If this is the case then i would believe that the agreed upon subordination is defective since lender A wouldnt have subordinated had they been privy to the knowledge of the transfer of title.
Q - so why does this matter ??
A - because its easier to conclude that a subordination created under fraudulant pretenses would be defective, and obviously a subordination that created a situation where the lender couldnt properly foreclose is not somthing any lender would ever agree to…
So all that being said - any intelligent thoughts from anyone would be appreciated and after the suit is concluded i will inform any intrested people what happens.
Posted by Amotoxracer on April 06, 2010 at 17:47:04:
This makes sense to me.
Regardless of the subordination the lein is present when any stranger to the title is added, therefore the leinholder should be able to foreclose on both owners.