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Trust Deed Questions

A trust deed is a deed that is transferred to a trustee as security for a loan between a lender and a borrower. Generally, a lender will loan money to a borrower to purchase property in exchange for the deed of the property as a security assurance that the loan will be repaid. Many issues can arise from this type of agreement which bring about many legal questions. Below are a few questions regarding trust deeds.

What is a second deed of trust and why are they used?

Generally, a second deed of trust plays the same role as a mortgage and is used when a homeowner takes on a second loan. Once a trust deed has been notarized, it needs to be filed with the recorder of deeds office and recorded by the clerk. This must be done in the same county as the property. Once this has been done, a third party trustee usually holds the deed until the loan is repaid. However, if the homeowner defaults on the loan, the trustee of the loan has the ability to foreclose and/or sell the property without involving the courts.

I hold the first trust deed on a home. 3 years ago they stopped giving me the full payment. I have tried to work with them. To repossess I need to send a letter, including a mini-Miranda warning. I believe this is part of SB1137. I can't find out where to get the mini-Miranda warning. Can you help?

Debt collectors are required by law to use the mini Miranda when they contact a person about debt. Regardless of whether by phone or letter, the debt collector must tell you that they are attempting to collect on a debt and that any information that they obtain will be used for the purpose of collection. Also, the debt collector must continue to inform you that they are attempting to collect a debt and that they are a debt collector.

The mini Miranda received its name due to the similarities to the Miranda rights used by police departments when informing a suspect of their rights to counsel.

Section 807 Part 11 explains this segment of the Fair Debt Collection Practices Act. The mini Miranda is not an official title, however due to the similarities, it is commonly known as such.

The correct wording of the mini Miranda under FDCPA reads like this:
"This is an attempt to collect a debt. Any information obtained will be used for that purpose. Unless within 30 days of your receipt of this notice, you notify us that you dispute the validity of this debt, it will be assumed to be correct. If you notify this office within thirty days that you dispute the validity of the debt, we will obtain verification of the debt or a copy of the judgment."

What options do I have when short selling my house and the third holder refuses to negotiate and will sue for the entire amount.

In order to short sell your home, the lender must agree to the sale because there is still a recorded lien on the home. If the lender chooses to agree to the sale, he/she will need to have all invested lenders agree to waive rights to attempt recovery of the loan. This will have to be in writing.

We have had a first trust deed mortgage loan with GMAC Mortgage for about 3 years on a home in Missouri. GMAC has underestimated escrow accruals on property taxes for 3 years and flood insurance for 1 year. When I got the loan they established that I qualified for $2100 and now they want me to pay $2850. What are my options? Do you see any significant compliance issues?

The additional amount is an adjustment and not a loan. This means that it isn't a qualification. As for the underestimation of the taxes are concerned, you need to figure out what method they used to be so far off on the amount. If you can show that there was negligence on their part, it may be possible for you to file against them. If you can show that the mistakes made by the company has caused you undo hardships, they may have to repair the damage by compensating your expenses. If you cannot prove negligence, your only recourse will be to pay the deficiency. Your taxes will rise and fall based on re-assessments and modifications made by the county.

Trust deeds can become legal nightmares for people who are unfamiliar with real estate law. You should always seek the legal insight of an Expert before entering into a binding contract.
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