Borrower will not sign DIL

[Eileen D.]

Hi,

I took part in a private mortgage investment over three years ago. There are two parties on the mortgage and unfortunately I am in second position. It is what it is. 

The borrower has not paid interest in almost two years and has been renting out the residence while not paying the taxes on the property, etc. We have asked him to reassign the lease to our LLC while signing the DIL. None of us want to deal with the time and cost of a foreclosure.

The good news is that he has informed his tenant to send the upcoming rents to our LLC and has said he will sign the documents but, of course, is delaying. Is there anything else we can do to prompt signing? I really, really would like to avoid a foreclosure especially considering I am in second position.

On another note, the tenant gave a security deposit to my borrower.  If my borrower does not send the security deposit am I responsible for making this tenant whole at the end of the lease? Thank you for any insight.  

[Tom Gimer]

@Jay Hinrichs Jay you raised the most important issue... what's up with the first?

Without hard numbers who knows whether it's worth doing anything to protect this 2nd. Taking title without knowing the equity position... next thing you know you own a property that is upside down and now YOU are 2 years behind on a first and there are a bunch of junior liens. 

Then what?

Also the first probably already has that assignment of rents. That would be evident from a current title search, which is clearly necessary.

Regarding the security deposit... take title and that becomes a liability.