Replies to This Discussion

Permalink Reply by smith1 on December 9, 2008 at 7:34

If you are talking to me (smith1), we went thru no "steps". Our landmand had money from Petrohawk drafted into our checking account with no problems. He was aware of our mortgage (not sure he knew it was Wells Fargo). NOt sure I understand all of the above discussion, just trying to figure it all out.

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Permalink Reply by Dion Warr, CPL on December 9, 2008 at 7:58

Smith1:

Besides the landman's possible ignorance of the situation regarding a prior existing mortgage, it may be that the HK is willing to take the business risk of possibly losing its lease due to a possible foreclosure, at least until such time as being directed to take further action if WF ever rears it head into your OGML deal, or otherwise instructed to take curative action by a title attorney to protect its lease.

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Permalink Reply by Sillysas on December 9, 2008 at 8:13

Ok so this statement "If you do not choose to comply with the terms, your lender and O&G can do it for you. Under the terms of most form leases, lessee is granted the ability, without your joinder, to discharge any tax, mortgage, or other lien upon the land and have the right to repayment to lessee any rentals and/or royalties accruing thereunder. Thus, the lender could give notice to you and O&G and state their terms for not finding you in immediate default, and O&G could settle with them without your consent, and claim against future revenue, in order to protect their lease."....Does this mean the O&G can pay off your house if they wish and own it???

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Permalink Reply by Dion Warr, CPL on December 9, 2008 at 8:46

Sandii:

Not really 'own it', but I don't want to get too far afield of my particular expertise (being a landman).

Theoretically, if your lender elected not to subordinate its rights to the lease, and wanted to demand the full balance of the note, and O&G wanted to protect its lease bad enough to pay off the mortgage instead of losing its lease, then yes, it could, and then withhold future revenue (rentals and royalty) to apply against any monies that O&G advanced to pay off your mortgage. But why would O&G go through all of that if WF wants is the future royalty payment?

As another example, let's look at a one-time payment issue versus a continuing obligation. If you let your property taxes lapse, and the property shows up on the delinquent tax list, or comes up for sheriff's sale, O&G can pay your taxes (redeem the property) on your behalf, and hold monies from your future revenues.

Hope this helps.

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Permalink Reply by Sillysas on December 9, 2008 at 14:20

Ok Today I just got a letter from WF stating the same conditions as others have mentioned before:

Nonrefundable Application fee, Application for Modification to Original Mortgage, Copy of Lease. They also stated they will NOT subordinate to a O&G under any circumstances. So like others, I am completely confused now again.

If they will NOT subordinate, why do I have to complete the all the documents they are asking for then?

It goes on to say "in the even of the withdrawl or rejection of this application, or failure or refusal on the part of the mortgage to execute the necessary instruments, or papers upon request, nothing herein contained or action taken in conformity herewith sall be deemed to constitute a forbearance, an extension, or a prejudice, to impair or affect WFB rights or rememdies under the mortgage."

So what does that mean? If I don't give them all the paperwork they are asking for they can default on the mortgage??? Is that right???

Has ANYONE gone through this whole process with WF and what happened?

And what is an Application for Modification to Original Mortgage?

PLEASE HELP!

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Permalink Reply by El Theo on December 9, 2008 at 16:03

Alright. Here's a new question to the "what if I don't" take.

If the O&G pays bonus or royalty directly to the mortgage company, can they also report these dollars as income to the mortgagee? If this is not taxable income, would a homeowner potentially avoid the tax burden from monies that were not paid to them? If so, this might be an immediate 30% or better return on investment.

Say it is so, Joe!!!

Permalink Reply by Dion Warr, CPL on December 9, 2008 at 19:19

Sandii:

Whew. I think I know what it means, but you need more than 'think', here. You need legal advice. As a non-attorney, I would tell you, do the refi process if you can, sign the lease prior to the commitment, and sign with a new lender. It may be worth a few bucks to you just to have control over your own destiny on this one.

The thing that bugs me here is: why do you have to pay an application fee to WF for the privilege of signing away your bonus money and/or royalties to WF? Sheesh!

For El Theo's post: I'm not sure about this either. Common sense would dictate that since these funds would be paid on your behalf, you get a benefit from them (even if not in your own pocket) and would be reportable as income, at least at the time that the revenue is 'earned' and applied to pay your advance in payment of a lien, but that's scientific wild-A#$! guess on my part. Thinking along the lines of if you take out a loan for $10K, you didn't just earn $10K, but you don't get to deduct your future loan payments (or payments on principal for a mortgage) on the $10K as non-taxable or an 'expense'. Check with your tax planner on this one.

Permalink Reply by The_Baron on December 10, 2008 at 4:25

El Theo, you will still get a 1099. The money will be sent to the mortgage company on your behalf. The money will be used to pay down your debt. It would be no different than you paying your note.

Permalink Reply by Sillysas on December 10, 2008 at 5:19

I spoke with the O&G company about WF requests and letter stating "will NOT subordinate". I'm sure there are many many other WF customers. They told me they handle everything with the mortgage company and provide all the information they need to them and never have a problem. We'll see if the O&G company gets it straightened out for me. It's in THEIR interest just as much as mine.

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Permalink Reply by Dion Warr, CPL on December 10, 2008 at 7:06

Sandii/Sillysas(?)

Good. Glad to hear that they will help you. I know you are all for them sending the proceeds towards the payoff of your note, and this way you won't have to deal with the headache.

Good luck. Hope they drill and produce long enough that they will eventually start sending money to YOU, and not just to your credit!

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Permalink Reply by The_Baron on December 11, 2008 at 17:27

It will be a happy day when the mortgage is stamped released in the courthouse....

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Permalink Reply by Eric S. Clarke on March 1, 2009 at 11:50

This is where the subordination clause comes into play in a lease that very few people are told about when you sign a lease and then the gas company can require that you produce one at a later date with a cost of 150-600 dollars out of your pocket. Well Fargo is the only one that I have heard of thus far not allowing subordinations. You are not the only one that Wells Fargo has been doing this too. I hope that you are able to get this accomplished. Try KTBS 3 on your side they may can help too as well as Carolyn Roy at KSLA12. If enough publicity is brought up about people having to do this and were not informed about the subordination of mortagage, as well as if you have a home equity line of credit they will request one from that also, then it is possible that Wells Fargo will start allowing this as not to create any more publicity on the matter.

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