I think Pat is making a very good real world point in his response. All three parties have to concider how important their relationships are. No doubt the lender made an error in not being aware of the existing second mortgage. It is obvious that the mortgage was not included in the report, that is the fault of the abstractor. The middle man pushed some paper through, and took his cut. I have a hard time believing this could lead to a $10,000 legal fee in total, much less to each of the parties.
It seems the best way out of this is for all three parties to just decide who takes on what portion of potential loss and move on. As Robert noted, there is no actual loss at the moment, only an inability to sell the loan at the expected profit.
It would be wise for all three to concider how important their relationship is with each other and work from there. If one of them does not feel that the relationshop is worth preserving, it would still be silly not to just work out an equitable solution.
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