If the 1st never recorded? - Posted by Shawn J. Dostie
Posted by Shawn J. Dostie on June 15, 2003 at 06:57:22:
I have a frind with a situation and need to pick your brain.
Ok, hang in here with me on this one. I need guidance.
Condo in foreclosure. Back in 10/02 I tried to help the Seller by attempting to reinstate the loan. I was going to rent back to him for a few months. He signed the deed over to me, authorizations, etc. There is a 1st and supposed 2nd mortgage.
1st - approx $50k
2nd - approx $14k
Condo value - $65k, I thought at the time, now looking like $75k if I do a little to it
I paid to reinstate the 2nd (stupid me) but the 1st’s balance according to the attorney was much higher than I thought so I let it go as a learning experience.
Now, 7 months later, I’m waiting for it to go to sale so I can perhaps redeem and sell it for the higher amount - values have gone up a bit. Seller is still living there and knows he can live “rent free” for 6 mos after sale due to redemption period. So I decided to try to short the 2nd because last time I talked to them they were open to it.
Called the county to get contact info (lender name) for the 1st because I had lost the attorney’s phone number. Now the interesting part.
County said the only mortgage recorded was the 2nd. No 1st mortgage filed (well, this is the 1st, but you know what I mean - other lender is missing in action). No foreclosure proceedings filed at the courthouse, no sheriff’s sale scheduled that they could tell. Hmmm…
So I ordered preliminary title work through my title company and they gave me a preliminary commitment with the condition of the $14k loan being paid off. Again, no mention of the larger mortgage.
So, I’m thinking… do I pay the $14k loan off and sell it? Hope the title insurance covers me if the bigger loan comes back? Scary thought.
Better thought… what if I were to sandwich myself in there somehow - I know the Seller would sign a mortgage to me - especially if I gave him a couple thousand to move out and move on. I already have the deed. So if I give him a couple thousand, can I have him sign a mortage for $50k and file it on the property, so if it goes to sale by the larger loan, they have to pay me off as well as the $14k loan? If they’re not recorded, I’d take priority, right? Is there anything illegal about that if the Seller signs it?
OR, after I get it signed and recorded, I call the larger mortgage company, advise them their people never filed their mortgage and they are in 3rd position, and short sale them for next to nothing to clear the title of that loan?
I see a lot of opportunity here due to this mistake on their part, but I don’t want to do anything illegal or that can come back at me. However, no need to pass it by, either, if the Seller is perfectly willing to cooperate. I have to hurry - they’re going to realize it sooner or later since they are working on foreclosing.