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Lesley Thomson Asked:

I have heard that if the 2nd mortgage company did not file a deed of trust with the recorder's office I can have the loan dismissed in CH 7. I need to know if this is true, and if so, what RCW or Title 11 code I need to reference in my paperwork. [Seattle WA]



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Answer Provided by: Barry Varshay [07/24/2009]

wow! good question. That is probably best answered by a bankruptcy attorney. However, I can tell you in general terms, there are several ways you can get out of a 2nd mortgage. 1st, if the loan was done by an institutional lender, then you can check the Reg Z disclosure for errors that could unwind the whole deal. Whether or not a loan is a 2nd mortgage or not, it can be included in a bankruptcy filing. The difference is whether or not the lender can still tie up your property. If there is not a deed of trust, then they are effectively an unsecured creditor like a credit card. However, an unrecorded deed of trust is not necessarily invalid, and could be recorded at a later date. there is not, per se, a requirement to record the document immediately. I know a few bankputcy attorney's i could refer you to, one specifically that has worked with exactly what you are talking about with the 2nd mortgage. Please let me know if you would like the referral.