Posted by Jimmy on August 14, 2008 at 04:28:29:
In Reply to: Re: Hypothecation - if something goes wrong posted by G.O. on August 12, 2008 at 11:00:13:
1. how a bank will step into your shoes is a matter of local law.
2. if you f/c on the note, you should inform the lender. if you regain title to the underlying real estate, they will want to grab it as substituted collateral. you don't want them to find out by themselves, because it makes you look bad. and they may call their loan. be upfront about it, and keep them in the loop.
note: I have an LOC secured by a portfolio of notes. and I have had to f/c on a note before. the bank was cool about it. and the day after the trustee sale, I executed a deed of trust document that made the real estate additional security for the LOC. no big deal. and they appreciated the fact that I respected the integrity of their collateral.