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CGaskill
Guest
0.10 Dollars($)
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 Posted: Fri Aug 17, 2007 8:34 am Post subject: What do I do if my second mortgage is in charge off status, |
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| I have two mortgages and I went through foreclosure several months ago but was able to get my loan with my first mortgage reinstated. The second lein holder immediately charged off my loan with them and won't negotiate at all. What are the rights of the second mortgagor and what are the possible repercussions if I continue only to pay my monthly payment with my first mortgage? |
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 evolovik26
Community Experts
Joined: 15 Aug 2007
Posts: 482
Location: Minneapolis
19.70 Dollars($)
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| Posted: Fri Aug 17, 2007 10:40 am Post subject: |
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A second mortgage holder cannot do anything but wait ( unless they are the same bank ) they are in the second position and therefore cannot initiate foreclosure untill the first mortgage calls the loan due or they are in first position ( first motrtgage been paid off ). However expect your second mortgage to charge off and your credit will be hurt significantly. You will likely never will be able to purchase another home and will continue incurring late fees and interest on your second mortgage. In addition if you ever attempt to sell or refinance the home they will come and collect the ballance you owe them before you get your money.
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Eugene Volovik
Branch Manager
Team USA Mortgage
612-481-3127
Conventional, FHA and Commercial Lending |
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colin
Moderator
Joined: 30 Jun 2006
Posts: 602
Location: Waltham, Massachusetts
112.61 Dollars($)
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| Posted: Fri Aug 17, 2007 12:50 pm Post subject: |
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Hi Gaskill & Eugene,
Welcome to Mortgagefit forum.
| Quote: | | what are the possible repercussions if I continue only to pay my monthly payment with my first mortgage? |
Gaskill if you continue paying only the first mortgage, the second mortgage has very less powers to do anything against you. The reason is that his mortgage lien is subordinate to the first mortgage lien.
What it means that even if the mortgage is in default, he will not attempt to foreclose as if he forecloses then he will have to pay off the first mortgage balance out of the sale balance and then anything left after first mortgage is paid can be used in settling the second mortgage dues.
First mortgage holder has the right to recover his dues first because of the first lien position. And if any other subordinate loan attempts recovery of their dues they will have to pay off the first mortgage holder.
But as the second mortgage holder has charged off the loan, it is affecting your credit score. You score must be going down because of the charge off. It will have an affect if in future you plan to take any other type of loan. And the interest rates charged from you will be quite higher than normal because of the charge off entry on your credit report.
Colin |
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larry
Joined: 27 Jun 2007
Posts: 3328
473.40 Dollars($)
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| Posted: Sat Aug 18, 2007 2:06 am Post subject: |
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Hi Gaskill,
As the second lien holder has charged off the loan, it means that you no longer have to pay for the outstanding debts towards the second loan. But the lender may inform this to the IRS and you may have to pay the income tax on the amount of the forgiven debt. To know more on the consequences after a loan is charged off, please refer to: http://www.mortgagefit.com/foreclosure/charge-off.html |
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