Tag: junior lien-holders

Law Review: Agarwal, et al.- Second Liens and the Holdup Problem in First Mortgage Renegotiation


Loss mitigation actions (e.g., liquidation, renegotiation) of delinquent mortgages might be hampered by conflicting goals of lenders at different seniority. In particular, a servicer has less incentive to take certain actions to reduce losses of investor-owned first lien mortgages if the servicer happens to own the second lien claim secured by the same property. Rather, the servicer has an incentive to hold up loss mitigation as it seeks to preserve the values of its own, junior, claim. The Study shows that a sizable fraction of delinquent mortgages with multiple liens are indeed characterized by the servicer holding a direct financial interest in the junior liens, but not the first-lien mortgage.… Read More

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N.C. Supreme Court: In re Vogler Realty- Review of Attorney’s Fees for Foreclosure Trustee by Clerk of Court not Authorized


In foreclosing on a Deed of Trust, the Trustee was paid  costs and expenses consisting of a commission, pursuant to N.C.G.S. § 45-21.15(a),  of 5% of the highest bid and Trustee’s attorneys fees of 15% of the outstanding promissory note on which behalf he was acting.  This resulted in third lien-holder receiving only partial payment and the fourth lien-holder receiving nothing.  The third lien-holder filed a motion with the Clerk of Superior Court arguing that under N.C.G.S. § 32-61,  the Clerk was authorized to determine the reasonableness of a “fiduciary or trustee” fees.  The Clerk agreed, reducing the Trustee’s fees substantially.… Read More

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