My question for anyone who knows the Arizona Trustee Auction / Sale Law. I did a title search and found NO subordination agreements in place and all real estate taxes caught up and paid for.
The title search shows TWO mortgages. First mortgage Is a large loan recorded as a 2006 date, has since switched Lender hands, but still shows up in the title report with the original recording date of 2006. The second mortgage show up in the title report as a HELOC recording a 2007 date (title report shows this mortgage/loan as an Active/Open mortgage). So the way the title search report reads, the first mortgage recorded in 2006 shows up first in time. The second mortgage recorded in 2007 shows up second-in-time.
At Trustee Auction, will the second mortgage (recorded in 2007) be wiped out? Again, I found no subordination agreement in the title search report.
Junior liens are typically wiped out at trustee sale. It sounds like you have done your research and checked for reconveyances and possible subordinations. You may also want to run a name search and check for potential IRS liens.
If you are new to title research you may want to consult with your local title officer or someone who has experience in researching title. It is always better to be safe than sorry.
Just general Q&A here:
I want to focus on your mentioning of “reconveyances”. The HELOC (second in time) loan that I originally identified in my posting shows a “Substitution of Trustee and Full Reconveyance” document per my title search results. The reconveyance occured in 2008 for the second mortgage (HELOC). My title adviser said the second HELOC loan was “fully reconveyed”. Will the reconveyance bear any influence on the first in time, first in line rule? It is my understanding the reconveyance document is just showing how the HELOC changed hands from one beneficiary to another. Is this an incorrect understanding?
I don’t think the Senior or Junior loan position has changed nor does the title adviser that provided the title search service for me. What are your thoughts on the significance of a loan that was reconveyed? How might it bear influence on the first in time, first in line rule?
I found there are no Active Judgments or Liens and I believe that section covers the IRS liens to which you refer. Am I correct?
A full reconveyance would indicate that the loan is no longer outstanding as it has been paid off.
Thanks Sean. Unfortunately, the title analyst said the SUBSTITUTION OF TRUSTEE AND FULL RECONVEYANCE document is very hard to interpret – there is no language in the document saying the loan was “fully reconveyed”. Thus, it looks like the document reads that Beneficiary 1 simply transferred beneficiary rights over to Beneficiary 2. Am I missing something here?
A transfer of a loan to another beneficiary is called an assignment, not a reconveyance.