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Borrower Isn't Paying |
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I have a question about second trust deeds. My mom and dad loaned a long time friend of the family who is a real estate agent $30,000 several years ago at an interest rate of 7% (I think). The agreement was for 7 years of interest only payments with a balloon payment of the full principle amount at the end of the term of the loan, which is this December 2009. Last month, the borrower has stopped her monthly interest payments, and we have received this lenghty email pretty much making all kinds of excuses regarding the state of the economy, the real estate market, mortgage company fraud, the unwillingness of mortgage lenders to re-negotiate home loans, etc, etc, etc. (I have very, very little knowledge about real estate, and my dad, who is the one who always handled all these affairs passed away 2 years ago...and my mom really doesn't know what to do or think). So what I'm getting from her email is the property value is in the toilet, there is probably negative equity in the home, which was supposed to be re-financed this December to make the trust deed payment, and my parents are pretty much not going to get any of their principle investment. My mom holds the deed to the house. I suspect the owner is keeping up with her mortgage payments to avoid foreclosure on her home, but is leaving her second trust deed lender out in the cold. What can the second trust deed lender do to secure their principle investment? What power does my mom have, if any, to secure repayment of her investment? What can she do? What steps does she need to take?? Thank you |
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Your mother needs to take all the papers she has to a lawyer who specializes in real estate. There are some options open to her, but depending on the value of the property at the moment, and the size of the first trust deed, it may not be worth taking any action at this time. If there are any steps to be taken, her attorney will have suggestions.
If it's any consulation to you, every month she doesn't make a payment, the amount she owes your folks is going up. If property values ever do get back up where they were, their investment will be worth more money. |
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Edith
Originally published on June 18, 2009 |
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