Home sold due to foreclosure - Am I liable for second loan?

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Icon Mini Profile mpharrie





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Post Posted: Thu May 25, 2006 12:25 pm    Post subject: Home sold due to foreclosure - Am I liable for second loan?
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I had a second mortgage on a rental property that I lost to foreclosure. The company with the first mortgage sold the house to satisfy the first mortgage, and there was nothing left over. Am I still legally liable for the second mortgage?
Icon Mini Profile Samantha
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Post Posted: Thu May 25, 2006 12:47 pm    Post subject: 2nd mortgage liability
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Hi,

Welcome to MortgageFit Forums.

I must make it clear to you first that whether you take a first or a second mortgage on your home; you are responsible for the repayment of the loan.

The home is used as collateral against your loan. Unfortunately the home was sold and the amount of money could be utilized only to pay the first lender. So, you are still on the hook for the second mortgage loan.

The second lender didn't release you from the mortgage and you still carry the liability to pay it. He still holds the promissory note that you signed.

Based on the state that you belong to, the lender can file suit against you anywhere between four to fifteen years. The time normally starts from the date the loan would have come due.

You might get harassed by the collection agencies later on or may face problems when you apply for another mortgage later.

But as you know everything passes away with time. So, your case too will improve either by your repayments or with time.

God bless you.

For MortgageFit,
Samanthartgage

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Icon Mini Profile jameshogg
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Post Posted: Thu May 25, 2006 1:01 pm    Post subject:
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Hi,

Often in these cases the lender is found to charge off the loan as he thinks that the debt can't be collected.

But you are not freed from the debt with a charge off. In a charge off the lender passes the debt to a collection agency to recover the debt.

This may have serious impact on your credit report and will stay on your report for seven years. So it is better if you take some time to work out a plan and try to pay off the money.
Sid

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Post Posted: Fri May 26, 2006 10:35 am    Post subject: Mortgage Query
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Hi all,

I am new to mortgage industry and would like to know which is the best site to learn about mortgage and also if someone can help me to review the mortgage docs!!!!

Thanks

appreciate your time and help..Smile
Icon Mini Profile Samantha
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Post Posted: Fri May 26, 2006 11:00 am    Post subject: mortgage information
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Hi Sid,

Welcome to MortgageFit Forums.

Well I guess everyone would like to help you in this matter. As a beginner you must go through the basics of the mortgage industry first and then move into the detail.

Gradually you will acquire more and more knowledge through learning and experience.

As a member of MortgageFit, I shall definitely suggest you to go through this site for knowledge. Smile This site has indeed got a vast collection of different articles and stories covered on mortgage.

There are a lot of other good sites also and you will find them on the internet. So, depending upon your requirement you can go through different sites. There is no harm in learning for different references.

You can take advantage of the forums of this site also. Try to participate in our forums and go through the visitor's queries and answers given by the members and other guests. You can gain a fair idea from there. You can also give your views to different queries.

Also if you want you can get your doubts cleared by posting your queries in the forums.

If you have a wish to learn then you will get plenty of help not only from here but from other good sites also.

God bless you.

For MortgageFit,
Samantha

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Laurence

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Post Posted: Mon May 14, 2007 2:58 am    Post subject: Do i have to pay for second loan and back tax?
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I am going to buy a home which is at foreclosure and would be attending an auction. The house has a 1st mortgage of $290K and a second mortgage of $80K. My question is if I buy the house will I need to pay the second loan or will it be enough to pay down the first and the back taxes.
Icon Mini Profile Samantha
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Post Posted: Mon May 14, 2007 3:53 am    Post subject: RE: Paying off second lien
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Hi Laurence,

As far as I understand, you need not pay for the second loan. Generally, when a first mortgage forecloses, the second loan or the junior lien gets wiped out.

What actually happens is that, when a senior lien forecloses, the junior lien holder or the second lender sends a representative to attend the auction. This is to make sure that the property is sold at a price such that the second lien is also paid off. The second lien holder may also buy the property in order to resell it. No doubt, they lose their money but then they can later on sell the property and get back the money along with the gains.

Hope this helps..

God bless you.

Samantha
svensson

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Post Posted: Fri May 18, 2007 7:50 pm    Post subject:
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Quote:

I am going to buy a home which is at foreclosure and would be attending an auction. The house has a 1st mortgage of $290K and a second mortgage of $80K. My question is if I buy the house will I need to pay the second loan or will it be enough to pay down the first and the back taxes.

you will have to make an offer on this foreclosed property by bidding at the auction. you need to contact the foreclosure sale trustee to know about the minimum bid that can be made. if you bid is accepted then from that amount the first mortgage will be made and anything remaining will go towards repayment of the second.
aleaf

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Post Posted: Thu Aug 23, 2007 4:20 pm    Post subject: 1st & 2ed mortgage
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i have a first & second mortgage .if i pay my first mortgage every month an not my second mortgage at all . can my second mortage take my home.
Icon Mini Profile miller_st
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Post Posted: Thu Aug 23, 2007 5:52 pm    Post subject:
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To take your home through foreclosure the second mortgage holder will have to purchase the first mortgage and then foreclose.

As his mortgage is subordinate to the first mortgage, if the house gets sold, first mortgage dues will have to repaid then other subordinate liens will be repaid.

If there is enough equity in the house then second mortgage holder might purchase the first mortgage and then foreclose. As he will know that even after paying off the first mortgage he will have the money to recover his balance.

Miller
BillonCapCod

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Post Posted: Mon May 19, 2008 7:39 am    Post subject: Pros & Cons of a Second Mortgage
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I am selling a B&B and the buyers can only get financing for $700K of the $1,200K purchase price. They can only put $250K down and want me to take a $250K 2nd mortgage (Purchase Price Mortgage) for the other $250K. They agree to pay off the loan in full in 3 years, and to pay 5% annual simple interest. Interest not paid until the end of the 3 years.

What are my risks in accepting this offer?
Icon Mini Profile cliff3

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Post Posted: Mon May 19, 2008 3:40 pm    Post subject:
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Hi aleaf,

Actually secon lien holders do foreclose all the time but, as miller said they are required to first satify the first lien holder before they receive any proceeds from foreclosure sale.

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Ishaan

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Post Posted: Tue Jun 17, 2008 12:27 am    Post subject: Mortgage
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Hey!

Thanks for sharing all this information!

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Post Posted: Tue Jun 17, 2008 2:26 am    Post subject:
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Hi Ishaan.

Welcome to the forum.

I agree with Cliff here that the second mortgage lender can also foreclose but after foreclosure the first mortgage lender have to be paid first because the first mortgage lender has the first priority. In such cases the first mortgage lender buys out the second mortgage lender if you are current and have the potential to pay him off.

Feel free to ask if you have any further questions.

Best of luck,
Larry
Carol

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Post Posted: Wed Aug 27, 2008 10:20 am    Post subject: Purchasing a foreclosed home foreclosed due to the second
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What happends to a first mortage when a home is foreclosed for the 2nd loan. Does the person who buys the property at auction become responsible for the first loan?
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