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MIL holds warranty deed/deed of trust/2nd lien; prp being foreclosed; need advice

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jbaker6

Junior Member
What is the name of your state? Texas

We are in a delimma. A year ago my mil sold her home and agreed to finance a portion of the selling price for the buyer. The majority was financed by a bank. Now the buyer is not paying and the bank is in the process of foreclosure, although, I don't think they have offically done it at this point.

We know nothing about the legal jargon on all this paper work, but at the time of closing we were assured that there was no way that she could lose her money by doing this. Now we are being told that unless the house auctions for more than what the bank wants out of it she will get nothing. It is not likely that the house will sell for as much, especially not more, than what the bank wants out of it.

If this is the case then the Warranty Deed w/Vendor's Lien, the Real Estate Lien Note, and the Second Lien Deed of Trust is not worth the paper it is written on.

Any advice on what she should do to recover what is owed her?
 


S

seniorjudge

Guest
"...Now we are being told that unless the house auctions for more than what the bank wants out of it she will get nothing...."

That is correct.

A foreclosure on the first mortgage/deed of trust wipes out all junior mortgage/deeds of trust.

Ask a real estate lawyer if there is a way in your state to go after the debtor even after you lose the collateral.

What would be even better, however, is for mom to buy the house at the foreclosure sale and then sell it again. That's done every day....
 

jbaker6

Junior Member
The problem with that is that the first mortgage was some kind of balloon type note where the person was supposed to make a balloon payment after one year which was last month. Therefore, there was very little if any paid on the balance in the last year, and apparently the people didn't keep the property up very well, so I am not sure that my mil would be able to sell it for what she might have to pay for it plus what it will cost to clean it up. I guess if she were to get it for a really big discount off what it's worth it might be worth it. Otherwise it would just be a headache for little or not return. This is just my best guess of course.
 

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