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Kim v. Lee9/20/2001
materially prejudicial. See majority at 9. Furthermore, the refinancing led to a substantial beneficial reduction in interest rate from 10.5 percent to 6.75 percent. Lastly, Pioneer Bank's deed of trust was promptly recorded, and there has been no suggestion Kim has taken any detrimental action in response to any failure on Pioneer Bank's part in this context.
However, the majority apparently finds the extension of time for payment (majority at 10) was prejudicial to the rights of the judgment creditor. But quite to the contrary, an extension of time to repay a loan is generally presumed beneficial to junior lienors, not prejudicial. See, e.g., Crutchfield v. Johnson & Latimer, 243 Ala. 73, 8 So. 2d 412, 414 (1942); Lennar N.E. Partners v. Buice, 49 Cal. App. 4th 1576, 57 Cal. Rptr. 2d 435, 439 (1996) (citing Resolution Trust Corp. v. BVS Dev., Inc., 42 F.3d 1206, 1215 (9th Cir. 1994)); Eurovest Ltd. v. 13290 Biscayne Island Terrace Corp., 559 So. 2d 1198, 1198 (Fla. Dist. Ct. App. 1990); Larson Cement Stone Co. v. Redlim Realty Co., 179 Neb. 134, 137 N.W.2d 241, 245 (1965). But see Citizens & S. Nat'l Bank of S.C. v. Smith, 277 S.C. 162, 284 S.E.2d 770, 772 (1981) (holding extension of senior mortgage resulted in loss of priority because intervening mortgagee had agreed to be subordinated on the assumption the senior mortgage would be fully satisfied on the initial due date).
Instead of a note amortized over 15 years with the full balance due on a balloon payment in 6, the terms of repayment were liberalized to allow amortized payments over 30 years with no balloon. This is anything but prejudicial to junior liens. The elimination of a balloon payment representing 70 percent of the purchase price was beneficial to Kim's junior judgment lien.
Perhaps the majority forgets that this is an action to quash a sheriff's sale initiated by the judgment creditor against the subject property. Had the sheriff's sale gone to fruition, and had there been no refinance, the judgment creditor would simply step into the shoes of the judgment debtor and take title subject to all prior liens, including the one with high interest and a balloon payment in six years. It is hardly a doubtful proposition that the successful bidder would prefer a lower interest rate and 30 years to pay to higher interest and a 6 year balloon. Moreover as a result of the refinance the judgment lien would now attach to all the property not just half, as was the case prior to the refinance. If this is prejudice, what is benefit?
Conclusion
Taken on its face the majority opinion cannot support its own conclusion. It confuses the status of title insurer with the property owner insured, relies on 'actual notice' which came after the transaction, and misconstrues benefit as prejudice.
I dissent.
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