All Forum Posts by: Mike Hartzog

OK, thanks for the explanation. That IS a pain. That's what a business entity is for in the first place, i.e., business entity is the beneficiary on the DOT and it forecloses, assigns, whatever...

@Bob Malecki - Is a fractionalized DOT in this case simply having multiple parties responsible for the repayment of the loan, or is it more along the lines of specific percentages assigned to each party?

@Bob Malecki  not sure about this in WA.  Not something that has come up for me.  Looking forward to learning the answer.  :-)

There are no special licenses required.  Partial contracts can be biased toward seller or buyer, so it’s important to read the contract carefully and understand how scenarios such as borrower default and early payoff are handled. 

Another one, they are trying to sell the same assets as another legitimate seller/broker is offering.  I’ve seen this many times.

Keep in mind the a 2nd position lienholder would not “pay off” the 1st position lien, they would buy the loan.  Precisely for the reason that they do not own the property.  

I would consult an attorney about whether or not you are obligated to work with the junior lien holder when the DOT is not recorded. I think your concern is unfounded though. We buy and sell loans all the time. You could sell the loan to anyone without issue. So if they want to give you a full payoff (remaining balance + accrued interest + legal fees to date), you assign the DOT to them, they become the new 1st lien holder, and you walk away. Simple as that. In addition, this it the way that junior positions protect their position. IMO working with them is the right thing to do. That said, you don't need to delay your foreclosure. It's good to have a time limit in which they need to act.

I should have suggested that you check with a local RE attorney.  The above is simply my perspective on it.

An unrecorded DOT is valid in most states. I would check to ensure it is properly notarized, references the correct legal description, etc. They should really get it recorded as it may be difficult for them to recover any overage if someone bids more than your payoff amount at the sale. That said, I would not let it hold up your foreclosure process. If they provide a payoff, you can always stop the process anytime prior to the foreclosure sale.

I have heard of that too. Not a bad scenario for the 1st lien holder because they don't want to own the unit and want to start getting their monthly dues out of it again. It's a hassle for an HOA to manage that, so cash for keys is a good remedy for them. The trick is finding the right party in the HOA to talk with.