def. judgment b4 foreclosure? - Posted by lukeNC

Posted by lukeNC on April 08, 2006 at 11:18:14:

ah…i am wrong in this instance…

all this time I’m thinking purchase money mortgage means when the mortgage is part of the purchase price.


def. judgment b4 foreclosure? - Posted by lukeNC

Posted by lukeNC on April 07, 2006 at 19:25:42:

Weird one here.

I’ve got a house where the owner owes $140k on the 1st and $40k on the 2nd. House is worth $190k. Both are purchase money mortgages. 2nd was recently purchased by an investment group in florida.

The 1st is now in foreclosure with a sale set for 5/30/06, but the 2nd refuses to deal. They are suing on the note!

I cant figure it out, there is enough room for them to protect their most interest, yet they are suing on the note instead. The owner/debtor is insolvent. Doesnt suing on the note dissolve their interest in the property?

Also in NC we have a statute banning deficiency judgments for purchase money mortgages, and I’m thinking this fits in that mold.

I cant help the guy because the 2nd wont deal, but isnt this kinda weird?

Could be a matter of timing… - Posted by JT-IN

Posted by JT-IN on April 07, 2006 at 22:41:41:

Many times the way a lender will deal weeks and months before a sale, and how they will deal days before a sale, are two different things.

The other factor is that just because the owner is an investment group from FL, doesn’t necessarily mean that they know the laws of NC. They could be confusing what they think to work elsewhere, for your locale… Sometimes they lose out, but they may make money overall, on lots of combined investments.

Suggestion is to establish some form of rapport and as good of a relationship as you can, and you may see their attitude change before the sale comes… or after the sale has happened. There is no time like after the much anticipated event has passed, and now all unknowns are known, that they sometimes will learn, that you told them so… I had one of those just this week. However, using the backdoor there is still a potential profit center in the deal I’m referring to, even following the sale… so it may still work out. What I’m suggesting is not to burn any bridges, ever, as you never know when they decide to sit up and pay attention…

The other factor here is maybe they bought the Note for 10-20% on the dollar and they can play hardball and simply risk losing that amount, or still collect that amount from the sale… or bid themselves for ownership conversion as a secured party. If they are extremely efficient, which isn’t usually the case for out of town groups like this, but if they are, and they got a big discount on the purchase, they could still make money here.

Just hte way that I view things…


Re: Could be a matter of timing… - Posted by lukeNC

Posted by lukeNC on April 08, 2006 at 07:04:38:

good point…

thing is, their attorney has already sent a letter to the debtor stating their intentions. I’m wondering why this attorney, who is NC based, doesnt tell them that they cant do it here.

I guess its their loss.

Things may not be as they appear…? - Posted by JT-IN

Posted by JT-IN on April 08, 2006 at 10:02:00:


I try to use this mindset often, and it seems that when I am certain that I understand all that there is to know on the subject, then I am surprised by what I didn’t know, and anticipate. Not always, but sometimes… So my suggeston is to try not to eliminate their approach as foolish, but instead look deeper and tty to understand why the owner of the 2nd could be approaching things this way.

Who did they purchase the 2nd from…? Was it the Seller of the property, who took back the 2nd…? Or could it have been otherwise…? There are always a piece or two of the puzzle that may not be as clear-cut as usual, and just allow for the possibility.

In some brief research abotu NC law and deficiencies… it appears that only the seller is barred from pursuing a def judg… I realize that I have little understanding of the statute, but could this be the angle that they are using, as they are NOT the seller… or the one who originated the purch money mtg…? Read the last sentence of the info below, then re-evaluate your position on this…


" The anti-deficiency statute, N.C.G.S. § 45-21.38, was not applicable to an erroneously canceled note because that statute applies only to purchase-money mortgages and the record here does not reflect that the loan was used to acquire defendants’ real property. Moreover, that statute only applies where the purchase-money mortgagee is the seller."