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Real Estate Loans
Petitioner worked primarily through a loan or mortgage
broker. The loan broker solicits both lenders and borrowers
through various methods, including advertisements. Typically,
higher risk borrowers will go to a loan broker to obtain a loan,
and the broker will in turn seek a lender like petitioner.
Usually the broker will collect all the information about the
borrower, including a loan application and credit check, and then
send a "package" to the potential lender for consideration. The
lender may then meet with the borrower to negotiate the interest
rate and to go to settlement. The loan broker charges a fee that
is paid by the borrower.
The Daniels Loan
In April of 1991 James and Suzanne Daniels (the Danielses)
executed a promissory note in the amount of $12,500 payable to
Merwin Coad secured by a deed of trust. At the time of this
loan, the property was burdened by an existing first deed of
trust in favor of Redstart Corp. (Redstart). Merwin Coad sold
the Danielses' second deed of trust note to petitioner. In June
of 1991 Redstart informed petitioner that the Danielses were in
default on their first deed of trust note.
On July 23, 1991, petitioner authorized a foreclosure sale
of the Daniels property in an attempt to ensure payment of the
debt due to him, secured by a second deed of trust. Notice of
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Last modified: May 25, 2011