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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] Paul, what do you think? Posted by steve on March 26, 2008 at 9:19 PM In Reply to: Re: Yes - they get their 'One Action' posted by Paul J. Molinaro on March 26, 2008 at 10:41 AM :Paul OK, let's take it one step further. Assume the property is an investment with 80/10/10 financing. The 2nd is a HELOC and the 1st and 2nd is with the same bank. All proceeds were ONLY used to finance the purchase. If the 1st forecloses, is there recourse on the second? Thanks Steve This thread brings up a tricky area. The term for the 2nd lender in the case where the first forecloses (trustee sale) is "sold out junior." If the loan is a recourse loan (basically, not a purchase money loan in California) then the sold out junior gets to go after the borrower. However, the usual case is that a borrower who just lost a property likely doesn't have anything to go after. That said, with the steep decline in California prices, some borrowers are making a financial decision to walk away from a property, even though they could have paid the mortgage. If the sold out junior were to realize that such a borrower had a little nest egg, that sold out junior might be tempted to try and collect. : - Paul Follow Ups: Post a Followup: Name : E-Mail : Subject : Comments: : :Paul : OK, let's take it one step further. Assume the property is an investment with 80/10/10 financing. The 2nd is a HELOC and the 1st and 2nd is with the same bank. All proceeds were ONLY used to finance the purchase. If the 1st forecloses, is there recourse on the second? : Thanks : Steve : : This thread brings up a tricky area. The term for the 2nd lender in the case where the first forecloses (trustee sale) is "sold out junior." If the loan is a recourse loan (basically, not a purchase money loan in California) then the sold out junior gets to go after the borrower. However, the usual case is that a borrower who just lost a property likely doesn't have anything to go after. That said, with the steep decline in California prices, some borrowers are making a financial decision to walk away from a property, even though they could have paid the mortgage. If the sold out junior were to realize that such a borrower had a little nest egg, that sold out junior might be tempted to try and collect. : : - Paul [ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] WWWAdmin 2.0a © 1997 Matt Wright and DBasics Software Company, All Rights Reserved

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