Legal Question in Real Estate Law in California

Re: wrap arpund mortage

It depends upon how it was documented. Sometimes people sell property "subject to" the existing mortgage, and often will call that a wrap - no new deed of trust is recorded, and therefore you generally cannot foreclose in that situation. If an "All Inclusive Deed of Trust" and an "All Inclusive Promissory Note" was properly drafted and the DOT recorded, AND there is a default under the terms of either or both documents, then yes, you can foreclose. Before you do anything, you need to review your documentation with an attorney, AND you need to be aware of some very stringent new requirements imposed upon a foreclosing creditor - it is very difficult for a small, individual lender to comply with these new regulations, and even though you are a wrap lender, you must follow the regulations. Further, be aware that there are a lot of people out there performing mortgage "audits" to ensure that mortgage lenders complied with RESPA, TIL Disclosure laws and predatory lending laws - you are generally held to the same standards as any other lender when you originated a wrap mortgage, and you may not have complied fully with these requirements.

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