[WSBARP] Deed of trust and foreclosure

[John McCrady]

The line of credit agreement is no doubt in part a promissory note.  The foreclosure of the first deed of trust, though it eliminated the lien of the Equity Agreement's deed of trust, did not wipe out client's obligation under the promissory note.

John McCrady
Counsel
Puget Sound Title Company
5350 Orchard Street West
University Place WA 98467
253-476-5721
j.mccrady at pstitle.com

From: wsbarp-bounces at lists.wsbarppt.com [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Timothy Lehr
Sent: Tuesday, November 26, 2019 2:17 PM
To: wsbarp at lists.wsbarppt.com
Subject: [WSBARP] Deed of trust and foreclosure

Real Estate attorneys,

PC owned real property with a mortgage and deed of trust securing the debt. PC subsequently took out a line of credit on the real property, signed a Bank Equity Maximizer Agreement (line of credit agreement), and equity lender secured debt with deed of trust on same property (inferior to first mortgage).
PC then defaults on first mortgage and property is eventually foreclosed and sold at trustee's sale. Bank buys the property at the trustee's sale then sells it to third party. Both deeds of trust are wiped out, but PC still has this Equity Agreement and has been paying on it.

PCs question is whether he is still required to pay on the line of credit. It has not yet been paid off. The agreement and deed of trust seem to be silent on this point. My assumption is the lender could still enforce the agreement that was signed even though the security instrument has been removed from the property. I also assume this situation comes up pretty regularly, but it's my first time looking into it. Any thoughts are appreciated.

Tim

Timothy C. Lehr
Attorney at Law
Stiles Law Inc., P.S.

p:   360.855.0131
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