My title rep friend printed out all open Trust Deeds against the property. My intuition seemed to be correct about thier purchase in 2006:
1st – 80% purchase money 10Y interest only, 5/1 ARM starts adjusting next year and goes to P&I in 2016.
2nd – 10% home equity credit line
3rd – 10% personal loan (Bene of TD is individual)
Then in 2007, they refinanced the 3rd with another home equity credit line to payoff the individual and cash out $83k.
Bottom line (assuming they didn’t inherit/win a large sum of cash or paydown significantly from cash flow), they owe over $600k on a home worth about $400k.
Now I’m trying to figure out how to approach them with this issue. They may just give me the finger and move on to a less involved tenant.
I’m thinking of adding a clause to the lease requiring notice should a default on any mortgage related to the property occur. If so, they have to return my deposit. I think I can even record some kind of document requiring the lenders to provide me notice of a default.
