HELOC is recorded 2nd in sequencing but same date?


#1

So could I be responsible for paying this?
Radar ID# 41304791


#2

If the HELOC was a 2nd (junior) loan, then it gets “wiped out” (steps buyer not responsible for paying) when you acquire the 1st (senior) at the steps … Many times you’ll see two loans made on the same date and often even time-stamped at the same minute. ALWAYS look carefully at the document number. The lower number will be senior … Example:
(1st) $400,000 DOT 9:01 a.m. 10/15/2005 2005-005678
(2nd) $75,000 HELOC 9:01 a.m. 10/15/2005 2005-005679

NOTE: The only thing that might change the order (seniority) is a subordination agreement (not common, but not rare either, so read any subordination agreement carefully … usually it’s the same lender)


#3

HI,
Danny B is right. I would add one caveat. If you have a doubt, like the larger loan is in a 2nd position, you may want to pull a copy of the Deed of Trust. I have seen cases where the Deed of Trust references the fact that it is subordinate to the deed of trust that is being recorded concurrently. There have been instances where the stacking order was incorrect but the deed of trust has verbiage regarding the position.
In the case listed above it would look like sequentially the HELOC is junior and it would not make sense that a lender would fund a 1st mortgage of $279k behind a 69k Heloc. That said, you will always want to do your research.


#4

Please fully explain “steps” used twice, once adjectivally, and once as a noun, in the featured item, above. Thanks,. john


#5

“Steps” is an abbreviation of “courthouse steps” … most trustee sales (Deeds of Trust [DOT] that are sold at foreclosure auction) are conducted on the “steps” of the local county courthouse. Hence “steps buyers” or “steps sales” are common ways to describe investors buying properties (more technically correct - acquiring the lender’s interest in the DOT being auctioned) at trustee auctions. Adding one more definition … in a “steps sale” the “trustee” is the party that facilitates the sale through the auctioneer and the trustee is acting on behalf of the lender (a.k.a. beneficiary of the DOT)


#6

The steps would mean a trustee sale since the sales can be held in any public place as designated by the trustee. Most sales take place on the steps outside of the courthouse so that is why Danny referred to them as a steps buyer. This is someone that buys properties at trustee sale on the courthouse steps. We recommend you check out this video that has actual footage of an auction. http://www.foreclosuretruth.com/blog/sean/video-foreclosure-auction-guide/