[quote=frenchlambda]My initial goal for starting this thread was to understand if my ex-in-laws have a legal right to proceed with foreclosing while I STILL make payments to them (as well as the first lender) EVERY MONTH.[/quote]
Without seeing the terms of your actual trust deed, no one can answer that. However, your question here SHOULD BE, what’s in it for them to do so??
Piggs, raise your hands if you, as a subordinate TD holder, would keep a regular and timely I/O borrower on the hook for $833 mo indefinitely who is not paying down any principal on his $200K encumbrance under these likely future scenarios:
(1)If your borrower decides to walk from the first TD tomorrow, you would have to come up with a min of $155K (incl arrearages and trustees fees) upon foreclosure to cure the 1st TD holder and then market the property in the =<$340 range (minus RE commission/closing costs) to obtain your $155K back and then whatever was left over would have to satisfy the $200K note;
(2) If your borrower decides to walk on your TD, you can hire a trustee on the 90th delinquent day to initiate foreclosure proceedings. By the 120th day, you have successfully foreclosed and paid your trustee $4K to $8K (or more). Now you are receiving a letter from the 1st TD holder with payment coupons based upon a *new* loan amount with poss late charges thrown in (with whom you are now involuntarily taking on said debt "subject to");
(3) If your borrower decides to walk on BOTH loans, you and B of A can race each other to the podium.
Any Pigg want to wager on who decides to foreclose first??
As a 2nd TD holder, what kind of deal would you make with this particular borrower under these circumstances if he approached you for some kind of "relief?" How much on the open market do you think you could get if you sold this trust deed? Is it marketable if TWO borrowers signed the promissory note, TWO borrowers signed the trust deed, but ONE borrower may have "quitclaimed" the property to the other??
