Legal Question in Banking Law in California

I own a second trust deed and recently found out that the borrower refinanced their first trust deed for a larger amount without contacting me. The borrower is now three months behind in paying on their second trust deed and I suspect they will soon default on both the first and the second. It seems to me that no lender should have refinanced for a larger amount without my O.K. What are my options? Can I go after the first trust deed holder for refinancing for such a large amount and putting my second trust deed in such a weak position?


Asked on 5/02/11, 7:35 am

1 Answer from Attorneys

It would be extremely unusual for what you describe to have happened. If, however, the old first was paid off and a new loan was made, without you signing a subordination agreement, then you are now the holder of the first, and the new loan is the second. That would be so unusual that it makes me think you either have some misinformation, or there has been some fraud, such as a forged subordination agreement in your name. If you would like this reviewed in more detail, feel free to send me an email. If it looks like you really are now in first position, great. If you need legal representation, I can help you with referrals to attorneys in your area.

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Answered on 5/02/11, 9:22 am


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