Why Sue???

Shoreline58

Does anyone know why it is common practice for a mortgage company to sue a lien holder when a HO's property is in foreclosure rather than negotiate?

I liened a subs income property after winning a Small Claims suit for some stolen equipment and won. He proceeded to mortgage all of his properties to the hilt and ran off to Panama. They are in foreclosure now and the Sheriff showed up with a Summons for me!? WTF, I am the injured party and went through the trouble and expense of the suit and lien.

Cole

Have you talked to an attorney?

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Shoreline58

Not yet, the amount involved is not that great. It was simply the principle of the matter originally.

Cole

I am not sure about the summons, it makes no since to me at all.

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ProWallGuy

You might have been summoned to be a witness, and not a defendant.

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Brickie

On of my fellow contractor neighbors had that happen to him last year. In the end the lawyers had a field day

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J-Peffer

if you are not a INC company, just go and plead the case on your own.

You have nothing to loose.

Bill Z

You have a lien on a property that the financial institution has a lien on. They want to sell the property to collect what they can toward the debt, your lien may be ahead of them, or behind them. You are probably second or third, but they need to let you know your lien will be no good once they foreclose. It's pretty common if you read the legal notices. Banks foreclose against the homeowner, but other lienholders become defendants and lose their place. You'll see dentists, contractors, schools (book fees) who have been awarded judgments. Normally the bank buys the property back and attempts to sell for more money through a normal real estate transaction UNLESS there's a gov't agency involved as a guarantor. They often just let it go for whatever the highest bid is. Call the bank and see if you can sign off rather than pay an attorney to help you end up with nothing.

mdavis

In a mortgage foreclosure lawsuit, the ultimate object of "foreclosure" is for the bank to recover its money by either pressuring the borrower to pay, or if that fails, by having the Court order a Sheriff's sale of the property. The Court will not order such a sale until all parties claiming an interest in the property have had a chance to make thier case to get paid. Thus, the lender must name as necessary parties to the foreclosure suit everbody who claims an interest in the property- this includes lien holders, other mortgage holders, tenants (in commercial or apartment buildings), etc. Once all parties claiming an interest in the property have been served with the lawsuit, the Court now has jurisdiction over all interests in the property and the Court's final order for the Sheriff to sell the property will forever "foreclose" (shut out) anybody else from making a claim against the property. Without all parties having been "foreclosed" from making claims, no one would bid at the Sheriff's sale for fear of someone claiming an interest in the property popping up later on the title. Believe me, foreclosing mortgage lenders would rather not go through the expense and hassle of dragging every lien claimant into a morgtgage foreclosure case, but lien claimants are "necessay parties."

The same goes for when a contractor forecloses on his lien. The contractor must not only sue the property owner, but all lenders, other lien claimants, etc. I've been through it; in fact, I'm the only lawyer I know who has taken a contractor's foreclosure case all the way through a Sheriff's sale. Almost always the case settles (sometimes after an order of sale but before the sale actually happens)- but this was the exception to the rule.