Legal Question in Real Estate Law in California
Second Trust Deed being questioned
I hold a second mortgage on a home in southern CA. This loan is now long overdue so I have begun the process to foreclose; a notice of default has been filed. I have made payments on the first mortgage in order to keep them from foreclosing.
The home owner has now retained a lawyer. She wants copies of everything in reference to the loan signed and unsigned. Her letter is a notice of rescission of mortgage based upon the understanding that the Creditor is subject to the Truth In Lending Act and hereby exercise their rights under this act, Regulation Z, and related statues and California state laws. She hasn’t been clear as to what her client is looking for – at one point she told us to walk away – no way is that going to happen. The documents have all been reviewed by the loan officer and his lawyer and I am being told everything looks good.
1. Should I provide all the paperwork the attorney requested or do you see this as a fishing expedition?
2. What does she need to file for discovery – must it be very specific?
3 Answers from Attorneys
Re: Second Trust Deed being questioned
It sounds as though she is fishing. There is no right to "discovery" unless suit is filed. I would go on with your foreclosure and call her bluff. If she files suit, she will at least have to prepare a complaint and explain what it is you are defending against, and you can respond accordingly. Under Truth in Lending laws, there is a one year statute of limitations which starts running at the time the loan doucments are signed, so unless your loan is very recent, there is a strong liklihood that this borrower is too late--they may want to see if there are some "unsigned" loan documents to make the claim that the statute has not begun to run...I would continue with my foreclosure until they serve you with a court order to stop.
Re: Second Trust Deed being questioned
Has a suit been filed? If not then you do not need to comply. I am not clear on the nature of the 2nd mortgage. Is it on a property that you sold? Contact me directly.
Re: Second Trust Deed being questioned
If you are foreclosing nonjudicially, by way of trustee's sale, then there is no lawsuit, and no right to discovery. In order to conduct discovery, a party needs more than a lawyer, they need to have a pending lawsuit. This wouldn't happen unless they file an action to stop the nonjudicial foreclosure.
Like Ms. Deming pointed out, they would need to show on what grounds they were trying to set aside the deed of trust. If you have a record of payments from this individual in the past, then it seems to me it would be hard to say the second deed of trust was forged.
Very truly yours,
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