Funding the equity payment as a second behind a loan I'm not the borrower on
Structure I'm being pitched. Operator wants 60k from me to cover a seller's equity on a house with a 198k first at 3.4%. I'd take a second deed of trust recorded against the property. The first stays in the original seller's name and the operator holds title.
What I can't resolve is my position if the first is ever called. I'm a junior lienholder on a note where the borrower is a person with no ownership and no interest in cooperating. If that first accelerates, the operator either refinances at current rates (the payment goes from roughly 1,180 to something near 1,700 on a fresh 30-year, which is most of the cash flow) or sells into whatever market exists that month. Either outcome pays me or wipes me depending on timing and on whether anyone bothers to tell me it happened.
Two specific things I want to understand before I put a dollar in. First, whether a junior lienholder in this setup can reinstate or cure the senior loan, because the cure rights I'm used to reading assume the senior borrower and the owner are the same party, and that's a question for counsel in the state where the property sits. Second, whether recording my second is itself the thing that surfaces the transfer, since the deed and my deed of trust hit the record together and anyone monitoring the parcel sees both.
Has anyone structured a notice mechanism that actually works here? A written agreement that the operator forwards every servicer notice is worth nothing if the notice goes to the seller's old address and dies there. I've asked for the servicer's contact authorization on the file and the operator got vague, which is its own answer.