Foreclosing lender does not have lien on my wife's property; can I put one in place to better bargaining position?

Question

The lender of the first mortgage on the house which my wife has sole title of, made an error when the mortgage was created, and does not have a lien on the property.

We are in the San Francisco Bay Area. My wife and I have a separate property agreement.

The lender has begun foreclosure.

If there is a lein in place by another party (me, or otherwise), and the lender does forclose, they will not be able to sell the property. It is my hope that this might allow a better bargaining position with the lender, and prevent the foreclosure from hitting my wife's credit rating, effect a short sale, etc..

A mechanics loan has rather specific and constraining time limits, so I'm likely looking at a judgement lien, as I understand it.

My question then is: can this be done, by a mere mortal, with limited funds?

Thanks much,

Ray~

Rob K. · Answer

When your wife signed the mortgage, did she also sign a promissory note? Isn't that a PROMISE to repay all of the money that was borrowed? Don't you think that if you borrow money and promise to pay it back, you should follow through?

Bill Gulley · Answer

R, since we don't know the entire situation, why not ask your attorney? I'm sure they will tell you filing a false lien is a form of fraud, you could get fined or you could go to jail. Errors and ommissions in closing, ommitted signatures can be cured in court. If there is evidence that there was a benifit from the loan and the debt was acknowledged by any payment, and she failed to resind the transaction, she has a mortgage. A lender is required to perfect thier security interest by filing the obligation. Failure can effect the lender's right to secure the collateral but they can take action to do so. Your wife will need an attorney to contest the lender's action in court. If the court deems the lack of any aspect required was in error, you'll be moving out. It depends on your attorney. Lastly, you're not qualified to be creative or act in the matter, by your suggestion of filing a false lien, so get an attorney or go with the flow and accept the consequences. You have gotten good and poor advice here, trying to get you want to hear may get you in trouble, so get an attorney if you are going to fight the matter.

Josh R. · Answer

Raymond Waldo whether your wife actually signed or not will not matter. Her voluntary payment of the note until she defaulted will be seen as acknowledgement to the validity of the loan. I still stand firm by my opinion, like Rob K, that you are trying to get away with something here under the guise of "doing whats right for your family".

Mark H. · Answer

Recording a false lien "to get a better bargaining position" is trying to get away with something. Its unfortunate that the lender hurt your feelings by asking you to pay your bills, but that doesnt entitle you to a free house. If the lender has initiated foreclosure, theres no doubt youve already gotten at least 6 months of free rent - probably significantly more than that. That was your "free pony", now you get to take your lumps. You're quite lucky to live in a state where deficiency judgements are rarely pursued. In my old home state, those who have legitimate hardships often have to file a chapter 7 bankruptcy, make a list of all their toys, & stand in front of a bk trustee in a public forum where that trustee grills the debtor *under oath* about their posessions, with complete authority to seize anything he wants to pay those bills. You have it easy.

Jan Smythe · Answer

Raymond: What I really find hard to understand is that you're saying that the bank hasn't recorded and is unable to record any lien, yet they are able to foreclose. Thats not adding up. If there is no mortgage/note recorded and nothing signed by her that can be recorded (i.e. is a legal mortgage doc), then I don't see how they could have gotten it to foreclosure proceedings in the first place. Jan There is so much unsaid here but I'm getting the feeling that there probably was a Note signed by the wife but the bank can't produce it as it, like so many others, were bundled, lost and no one knows where the ORIGINAL NOTE is which shows her signature, so the bank can't legally foreclose. There are too many cases like this throwing people out of their homes illegally. I trust this is not the case, but it just might be?

Mike H. · Answer

Something else doesn't seem right here. Why do they need her signature to record the mortgage. Did she not have to sign a mortgage and have it notarized when she closed on the loan? If not, then I would actually think there's a problem there that might get you some more "free" time. Whether its right or wrong, I'm not going to waste any time/effort debating the fact. But as to whether there is a lien or not and what you can do about it is another story. The bottom line is that if there is no current mortgage recorded on the home, then I don't see how the bank would have any right to foreclose. But this is assuming that she never signed a mortgage in the first place and/or that what she signed wasn't notarized. If nothing else, I think you could have a field day in court with trying to hold the foreclosure up. If in fact, thats what happened here, I don't see what the bank would use to foreclose on the home if they don't have any signed mortgage/note from her. But there's really zero value in recording a lien with the house. Because that sounds like you're suggesting that you believe the bank does have the right to foreclose but you're hoping to jump in front. Keep in mind that even if the bank records something after you, that doesn't mean your position will wipe out their rights to the home. It means they can still force the foreclosure. It will go up for sale. But, I believe, it would mean that after the home was paid for, the lien in first position would get paid off first. And then, once they were paid in full, the lien in second position would be paid off next. Is that right? I guess if he wanted to create a mortgage on the house for 20k, the courthouse sale proceeds would have to go to him to satisfy the 20k debt first and the bank - if they came in second - would have to take what was left. What I really find hard to understand is that you're saying that the bank hasn't recorded and is unable to record any lien, yet they are able to foreclose. Thats not adding up. If there is no mortgage/note recorded and nothing signed by her that can be recorded (i.e. is a legal mortgage doc), then I don't see how they could have gotten it to foreclosure proceedings in the first place. Good luck. But there definitely seems to be a lot more going on with this than is being shared. And without knowing the actuals, I don't think you'd find anyone that can really give you meaningful advice other than going to an attorney.

David Turner · Answer

Raymond, Without you telling us what is going on makes it really hard for people to give their advice/opinion. You keep chiding people for expressing their opinion after you came to a public forum and asked for everyones opinions. I understand that they might not have all the facts, but this is because you won't give us the facts. I understand that you want some things to remain private, but without giving us the whole story we can only guess as to the best course of action. In what way do you have the ability to place a lien on the property? Have you confirmed 100% that the bank has not filed a deed of trust? How have you confirmed this? Without answering these questions no one can possibly give you the advice you are looking for.

Kris Fox · Answer

I just had a similar situation where I was the lender on hard money and the borrower tried to issue his parents a lien on the property to tie up my collateral. My attorney told me not to worry as it was clearly "fraudulent conveyance." We got him to subordinate the lien on the property and there were no issues.

Xing Zhu · Answer

Because of the current tough regulations on foreclosing, it is possible that your wife may be able to stop the foreclosure as she did not sign the mortgage. Nevertheless, the bank may pursue the money for the same reason. It will be a long court fight.

Raymond Waldo · Answer

Josh, Mark & Rob- Again, you know absolutely NOTHING of the incidents involved in the situation, and yet you are free to assert the moral high ground? No other option- I AM IN THE WRONG- cut and dried? I must especially applaude and thank Mark, who has felt the need to berate, dismiss and lecture me, having complete mastery of the issue, knowing all the particulars, so that he feels just in dispersing his righteous venom. I do appreciate your vitriol, as since I "have it easy", I surely deserve your self-righteous scorn. Since you gentlemen clearly know all that need be known regarding my and my families situation, you can no doubt clear up some of the other "feelings" I've had "hurt"; the harassment(s), the wrongful detention, the numerous privacy violations, the forgery, the wrongful prosecution, the intimidation, the forced "accidental" eviction (when still current and up to date, by the way). This is all verifiable, tangible, documented, and filed with the court, but there are limits to the money (especially), time and energy one has to pursue "justice", especially when doing so will do nothing but add to our encumbrance and loss. No one is interested in another nobody that gets manhandled by a lender, etc.. However you still assert- still KNOW, I am doing something wrong, by asking a question, by wanting to know something of the particular legal and financial labyrinth we are in. Forgive me for being so lowly as to perceive your sage wisdom as conceit, arrogance, and insult. You shall remain in my family's prayers.