Deed of Trust

Archive for September, 2007

Question: If a borrower is pending foreclosure and has a first and a second, what recourse do each of the lenders have?

I am aware of the lender's right to seek deficiency judgement, and 1099 related consequences, and have read the 2007 Mortgage Debt Relief Act (cancellation and forgiveness of debt sections). Aside from that information which is pretty straight forward, what exposure does the borrower have in terms of the note and Deed of Trust holders rights to the borrower's other assets? Meaning, can the second, (lender) legally pursue the borrower for the outstanding loan balance? If so, in what ways? P.S. I know it varies by state, so in this instance: NEVADA.

Answer: Generally speaking, the 1st Trust Deed Holder will go after the property via foreclosure by advertisement. After this, two possibilities will occur concerning the 2nd Trust Deed Holder:

1 - 2nd will bring the 1st current, and foreclose against you. (Almost never done.)

2 - 2nd will allow his secured debt become unsecured. (Almost always done.)

In the current financial climate, the 2nd will very likely send the unsecured debt to collections. They can sue for the deficiency judgment as well.

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