Investors: Default

If A Borrower Does Not Pay

If the borrower fails to pay the loan as promised, the Deed of Trust allows the lender to sell the property through a non-judicial foreclosure procedure. Invested capital may be recaptured at the foreclosure sale from the purchase by a successful third party bidder or through subsequent resale of the foreclosed property.

Servicing functions include:

  1. Initiate foreclosure proceedings, if necessary (file an NOD - Notice of Default)
  2. Retain an attorney to act on your behalf if borrower files a Chapter 7, 11, or 13 bankruptcy case to forestall the foreclosure sale.
  3. Each Investor pays the attorney’s fees. These fees are reimbursed by the borrower in the event of reinstatement or from the proceeds of the property sale.
  4. Check on senior lien status, property tax status, and make sure hazard insurance remains in effect.
  5. Arrange Forced Insurance Coverage in the event that the borrower allows the existing coverage to lapse.
  6. If in a junior position, to advance funds to keep the senior loan current due to borrower’s delinquency.
  7. Discuss work out arrangements with borrower through lower payments, extending the loan, or modifying its terms.
  8. Discuss Deed in Lieu of Foreclosure. This circumstance is very rare and involves the borrower granting his/her interest in the property to the investor(s) rather than going through the foreclosure process.
  9. If the property reverts back to the investor at the foreclosure sale, locate a Realtor to market the property.
  10. Coordinate any repairs or improvements to the property needed to enhance marketability.

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Disclosure: Money invested through a mortgage broker is not guaranteed to earn any interest or return and is not insured. State law dictates that we acknowledge that interest on trust deeds is not guaranteed. No investment is completely risk free and past performance is not a guarantee of future results. Before investing, investors must be provided applicable disclosure documents. Disclaimer: Private lending collateralized by Deeds of Trust is not suitable for every investor. This information does not constitute an offer to sell Deeds of Trust or a solicitation to sell securities. Private lending collateralized by Deeds of Trust involves substantial risk; before investing you should consult with a qualified financial advisor to determine whether such (risk) is suitable for your investment objectives. By accessing any page within the Investor Resource Center, you acknowledge you have read this disclaimer, and you understand if you click on a link to any listed organization you will be redirected to a non-HanoverMC Web site. You also acknowledge it is solely your decision to choose to work with any person or firm identified within these web pages. You, therefore, agree to hold HanoverMC and its officers, directors, members, employees and agents, harmless from any adverse consequences of any dealings with the individuals and firms listed herein. Mortgage Broker fees will apply unless stated otherwise. California Department of Real Estate, real estate broker license number 00428961. All Rights Reserved.