Elena's home in Redmond, Washington is subject to a first deed of trust held by First National Bank and a second deed of trust held by Community Credit Union. First National Bank initiates non-judicial foreclosure and conducts a trustee's sale. The sale proceeds are $420,000. First National Bank is owed $380,000 (principal, interest, and fees), and the trustee's fees are $5,000. Community Credit Union is owed $50,000. Under RCW 61.24.080, how much, if anything, does Community Credit Union receive from the trustee's sale proceeds?
Correct Answer
B) Community Credit Union receives $35,000, which is the surplus after the trustee's fees and First National Bank's debt are satisfied.
Under RCW 61.24.080, proceeds from a trustee's sale are distributed as follows: (1) Trustee's fees and costs: $5,000; (2) First National Bank (senior beneficiary): $380,000; Total paid out: $385,000. Remaining surplus: $420,000 - $385,000 = $35,000. This surplus is next distributed to junior lienholders in order of priority. Community Credit Union, as the second deed of trust holder, receives $35,000. Since $35,000 < $50,000 owed, Community Credit Union still has a deficiency claim for the remaining $15,000, but receives $35,000 from the sale proceeds.
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Related Topics & Key Terms
Key Terms:
Related Concepts
In the context of foreclosure, a deed transfers ownership of the foreclosed property to the new owner, typically the buyer at a foreclosure sale.
Discount points are upfront fees paid to a lender at closing to reduce (buy down) the interest rate on a mortgage loan. One point equals 1% of the loan amount and typically reduces the rate by approximately 0.25%.
An FHA loan is a mortgage insured by the Federal Housing Administration that allows lower down payments and credit scores than conventional loans. It is designed to help first-time homebuyers and borrowers with limited resources.
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