Loan Acceleration via Transfer of Title due to FC of Jr Lien

[Andy Mirza]

Assuming the note of the senior lienholder is a typical institutional note with a due on sale clause:

Can the senior lienholder accelerate a loan when a 3rd party obtains title by means of a trustee sale of a junior lien?

I purchased a manufactured home on its own lot a couple of years ago at a trustee sale for an HOA lien. I reinstated a loan, which was in default and senior to the HOA lien, and contacted the bank to take the loan subject to. The bank refused to give me any information on the loan since I was not authorized by the original borrower. I had the loan number, found out what the payment was from a friendly branch banker, and made P&I plus impound account payments ever since.

I should have concerned myself about the lack of insurance coverage for myself earlier but didn't until recently. I know that the lender pays for the property taxes and I assume that it has forced place insurance that names itself and the original borrowers as beneficiaries. It bothered me that I was paying for insurance that wasn't covering me. I contacted the bank again, this time in an attempt to replace the insurance policy at a minimum or to assume the loan in a best case scenario.

They responded by sending a letter addressed to the original borrower stating that they may accelerate the loan unless the property changes title back to the original borrowers, they refinance, or a qualified person assumes the loan. After talking to the customer service rep, assuming the loan or getting a new one from them is not an option since we hold title in an LLC.

I looked up CA state law (Civil Code 2947-2955) but couldn't find anything that might help me. Maybe I missed something. I always thought that a junior lienholder was allowed to make payments on a senior lien to protect their interest. However, I am not a junior lienholder, I am the property owner by way of the junior lienholder's disposition of the property.

Any thoughts? I'd appreciate any insights.