As a private mortgage lender, what are my options when my client turns back the property and doesn’t pay the mortgage anymore?

UPDATED: Dec 12, 2011

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As a private mortgage lender, what are my options when my client turns back the property and doesn’t pay the mortgage anymore?

Under CA law, what recourse do I have as a private lender when “everyone” is foreclosing on their homes?

Asked on December 12, 2011 under Real Estate Law, California


FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

If you hold the first trust deed on the property that you are writing about and the borrower has failed to keep current on the monthly debt amount your option is to try and work a modification of the loan, accomodate in a short sale or foreclose upon the property.

If the borrower has offered to provide you with a deed in lieu of foreclosure, before accepting it, you need to obtain a preliminary report on the parcel. If there are junior liens on it, you should consider foreclosing on the parcel to wipe them out to clear title to it as opposed to taking title subject to the liens. For further questions I suggest that you consult with a real estate attorney about the question you have written about.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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