Legal Question in Real Estate Law in California

Re: Judgement on a recourse loan

Should be a relatively simple process. You need to sue on your promissory note. Should be quick and easy. My guess is that the borrower will not answer the lawsuit and you will obtain a default judgment. Let me know if you need help on this. I have taken several breach of promissory note cases to judgment. Feel free to email. [email protected]

Re: Judgement on a recourse loan

You would have to file, and prevail in, a lawsuit. I would consult the attorney who drafted your note and deed of trust.

Re: Judgement on a recourse loan

The loan is considered to be a "sold-out second", and given what you have provided in terms of facts, it would appear that it is in fact a recourse loan. You will want to review the loan documents and the fact surrounding the loan itself with an attorney before you can definitively reach that conclusion.

If the loan is recourse, you have a few options. First, you could attempt to collect it yourself by writing to the debtors and using typical collection efforts (letters, phone calls, etc...); however, be very very careful as there are a set of laws that govern what you can and cannot do as a debt collector. The second option is to turn it over to a collection agency. You will pay a fee for this (usually a percentage of what they collect), but they are familiar with the laws that govern their activity (not that they always comply with it). Finally, the best option is to sue them in court - depending upon the amount, you may be able to use small claims, or may have to file in Superior Court. In either case, I would suggest you contact an attorney to review the matter, and advise you, if not represent you in the collection suit. I suggest that obtaining a judgment is the best approach because if you do not, the Statute of Limitations on collecting the debt is running, and if you allow it to expire, you may never be able to collect it. Once you obtain a judgment, its good for 10 years, and can be successively renewed.

*Due to the limitations of the LawGuru Forums, The Gibbs Law Firm, APC's (the "Firm") participation in responding to questions posted herein does not constitute legal advice, nor legal representation of the person or entity posting a question. No Attorney/Client relationship is or shall be construed to be created hereby. The information provided is general and requires that the poster obtain specific legal advice from an attorney. The poster shall not rely upon the information provided herein as legal advice nor as the basis for making any decisions of legal consequence.

Re: Judgement on a recourse loan

You are now (apparently) an unsecured creditor with a (probably) breached loan agreement. Your nexct step is to re-read your loan agreement with the borrower to determine exactly what default or defaults have taken place. Usually impairment of the collateral, e.g. by letting it be foreclosed by another creditor, is an occurrence of default and a breach. There may be other breaches of your loan agreement by now as well, such as arrearages in payment beyond the grace period, if any.

So, after figuring out all the breaches of contract that have occurred, you sue for those breaches and ask for the remedies provided for these breaches in the loan contract. Usually there is an acceleration clause that makes the entire balance due and payable upon an uncured breach, and so asking for payment in full with interest is your most powerful remedy.

It's possible you may also have a fraud claim buried in there - fibs in the loan application, for example.

Re: Judgement on a recourse loan

You need to declare the entire balance due. Then you need to file a civil collection lawsuit against the debtor.

The damages you are entitled to are the difference between what the market value of the house was on the sale date and what the total amount due was on the first and second. If the market value of the home is more than the sum of the first and the second, then you are entitled to nothing.

Re: Judgement on a recourse loan

Yes. YOu have to sue on the note.