Legal Question in Real Estate Law in California

Re: Consent for mortgage refinance and home equity line of credit?

I answered this in the initial post.

Re: Consent for mortgage refinance and home equity line of credit?

Possible? Yes. Legal? Maybe. Ethical? No.

I don't think any of these things is likely to happen with a major lender such as a bank or S&L; it would obtain a title report, know about your existing mortgage and the fact of co-ownership, and would refuse to deal with one owner without the participation, in some way, of the other.

There are, however, or were before the subprime lending crisis, lots of small-time and greedy lenders and loan brokers out there, trying to do every deal in sight. Lots of poorly-researched loan deals have been done.

It is legal and proper for a co-owner to borrow against his or her partial interest in the jointly-owned property, but major lenders won't touch these situations because a part interest in a home is poor collateral, there being little to no market among strangers for partial ownerships in homes.

Further, co-owners of real property are fiduciaries of each other, and have a legal duty to keep each other advised of deals like this, if not to get permission. If you end up suffering any losses as a result of any unilateral actions your mother takes, you may have good cause to sue her for breach of her fiduciary duty to deal fairly and openly with the co-owned property.

If she refinanced the property, she may have shot herself in the foot. A refinancing, as the term is usually meant, includes paying off the existing financing. You were on the hook for at least part of the original loan that got paid off, but neither you nor your partial interest in the property can be made liable for or be used to collateralize a note and deed of trust you didn't sign. You may end up being the beneficiary of an unintended gift of having your loan obligation paid off without becoming liable for the new loan. (I wouldn't count on this, however; judges can find ways to straighten out the end results).

I think a first step here would be to examine the County Recorder's records for this property for the period since its initial purchase, to see what unexpected loans, reconveyances, etc. have been recorded on it. If there is anything you didn't know about and approve, see a real estate lawyer immediately!