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<p class="MsoNormal"><span style="color:#1F497D">Hold on. (I am doing a nonjudicial foreclosure.) Are you saying that the surplus funds go to pay off the junior lienholders that I thought I was going to wipe out? So:<o:p></o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoListParagraph" style="text-indent:-.25in;mso-list:l0 level1 lfo2"><![if !supportLists]><span style="color:#1F497D"><span style="mso-list:Ignore">1.<span style="font:7.0pt "Times New Roman"">
</span></span></span><![endif]><span style="color:#1F497D">If Creditor doesn’t go to sale, then Creditor ends up paying off the junior lienholders in order to sell the property free and clear. (Not a Good Result)<o:p></o:p></span></p>
<p class="MsoListParagraph" style="text-indent:-.25in;mso-list:l0 level1 lfo2"><![if !supportLists]><span style="color:#1F497D"><span style="mso-list:Ignore">2.<span style="font:7.0pt "Times New Roman"">
</span></span></span><![endif]><span style="color:#1F497D">If Creditor goes to sale and no one bids, junior lienholders get wiped out and Creditor gets the property. (A Good Result but may be unlikely considering FMV of property is double the loan amount.)<o:p></o:p></span></p>
<p class="MsoListParagraph" style="text-indent:-.25in;mso-list:l0 level1 lfo2"><![if !supportLists]><span style="color:#1F497D;background:yellow;mso-highlight:yellow"><span style="mso-list:Ignore">3.<span style="font:7.0pt "Times New Roman"">
</span></span></span><![endif]><span style="color:#1F497D;background:yellow;mso-highlight:yellow">If Creditor goes to sale and someone bids and if Creditor has to bid up to or over the amount of junior liens, then Creditor gets the property but also has paid
the amount of the junior liens. (Basically the same result as option #1 above. Not a Good Result).<o:p></o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D">Are we having fun yet? I have some extra facts that may now come into consideration. Creditor, for reasons I can’t disclose, reaaaally wants the property back. Also, Creditor actually has two deeds of trust
recorded against the property and I am foreclosing on the second one right now. The plan is that if Creditor is outbid at the foreclosure sale under the second Deed of Trust, Creditor was then going to foreclose under the first deed of trust. The fact that
the property is still subject to the lien of Creditor’s first deed of trust <i>may</i> dampen third party bidders at the sale under the second deed of trust.
<o:p></o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D">Patrick, is this also your analysis?<o:p></o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D"><o:p> </o:p></span></p>
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<p class="MsoNormal"><a name="Paul_Neumiller2"><span style="color:#1F497D"><img width="250" height="150" id="Picture_x0020_2" src="cid:image001.jpg@01D34F39.73A9BBB0" alt="Paul Neumiller"></span></a><span style="color:white"><o:p></o:p></span></p>
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<p class="MsoNormal"><span style="color:#1F497D"><o:p> </o:p></span></p>
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<p class="MsoNormal"><b>From:</b> wsbarp-bounces@lists.wsbarppt.com [mailto:wsbarp-bounces@lists.wsbarppt.com]
<b>On Behalf Of </b>Patrick McDonald<br>
<b>Sent:</b> Friday, October 27, 2017 2:34 PM<br>
<b>To:</b> WSBA Real Property Listserv <wsbarp@lists.wsbarppt.com><br>
<b>Subject:</b> Re: [WSBARP] Foreclosure Fun!<o:p></o:p></p>
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<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">The junior lienholders would be entitled any surplus funds before the owner. If you foreclose nonjudicially, see RCW 61.24.080(3). If you foreclose judicially, see RCW 61.12.150.<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">Patrick McDonald<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<div>
<p class="MsoNormal"><b>_______________________<o:p></o:p></b></p>
<p class="MsoNormal"><b>Pody & McDonald, PLLC<o:p></o:p></b></p>
<p class="MsoNormal">1200 Fifth Avenue, Suite 1410<o:p></o:p></p>
<p class="MsoNormal">Seattle, WA 98101-3106<o:p></o:p></p>
<p class="MsoNormal">T: 206-467-1559<o:p></o:p></p>
<p class="MsoNormal">F: 206-467-4489<o:p></o:p></p>
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<p class="MsoNormal"><o:p> </o:p></p>
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<div style="border:none;border-top:solid #E1E1E1 1.0pt;padding:3.0pt 0in 0in 0in">
<p class="MsoNormal"><b>From:</b> <a href="mailto:wsbarp-bounces@lists.wsbarppt.com">
wsbarp-bounces@lists.wsbarppt.com</a> [<a href="mailto:wsbarp-bounces@lists.wsbarppt.com">mailto:wsbarp-bounces@lists.wsbarppt.com</a>]
<b>On Behalf Of </b>Paul Neumiller<br>
<b>Sent:</b> October 27, 2017 2:15 PM<br>
<b>To:</b> <a href="mailto:wsbarp@lists.wsbarppt.com">wsbarp@lists.wsbarppt.com</a><br>
<b>Subject:</b> [WSBARP] Foreclosure Fun!<o:p></o:p></p>
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<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">Thinking aloud here and need confirmation (or a slap down if needed). Representing Creditor, I started a foreclosure action against Debtor. Creditor accepted a Deed-in-Lieu in order to get possession quickly (and start repairing the property).
The DIL contains non-merger language so the lien of the deed of trust did not merge into the fee ownership of the property. Trustee Sale Guarantee discloses large liens against property.<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">So I am thinking through the ramifications if Creditor continues with the foreclosure action. The benefit is eliminating the large liens. The only risk that I have been able to identify (other than my additional atty fees and the time
delay) is if someone tries to outbid Creditor at the foreclosure sale. BUT, it seems to me that any excess money goes to the owner of the property so if someone successfully comes in with $1 million then Creditor gets the surplus funds as the owner (Good
Result). And, if Creditor wants to be the successful bidder at the foreclosure sale, Creditor could bid the price up even higher than $1 million because the surplus funds go back to Creditor anyway as owner of the property (again, Good Result).
<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">I am missing something here? I got the non-merger language blessed by the title company (<i>and</i> the underwriter) so I am fairly confident the non-merger language is effective. The title company agrees with my analysis but I still
have the fear of the unknown. Is my analysis correct? Are there other risks I need to consider in foreclosing on property already owned by the foreclosing lender?<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><a name="Paul_Neumiller"><span style="font-size:12.0pt;font-family:"Times New Roman",serif"><img border="0" width="250" height="150" id="Picture_x0020_1" src="cid:image004.jpg@01D34F36.965CAA80" alt="cid:image004.jpg@01D34F36.965CAA80"></span></a><span style="font-size:12.0pt;font-family:"Times New Roman",serif"><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif"><o:p> </o:p></span></p>
<p class="MsoNormal"><o:p> </o:p></p>
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