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I had a [url=http://www.mortgagefit.com/second-mortgage.html]second mortgage[/url] 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?

Samantha's picture
Samantha | Joined: September 16, 2005 11:59 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

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

Like | Dislike | Share | Posted: Mon, 05/14/2007 - 03:53 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

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.

Like | Dislike | Share | Posted: Mon, 05/14/2007 - 02:58 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

[quote:b455fd4f0c]
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.
[/quote:b455fd4f0c]
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.

Like | Dislike | Share | Posted: Fri, 05/18/2007 - 19:50 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

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.

Like | Dislike | Share | Posted: Thu, 08/23/2007 - 16:20 | Post subject:

miller_st's picture
miller_st | Joined: January 17, 2007 04:47 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

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

Like | Dislike | Share | Posted: Thu, 08/23/2007 - 17:52 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

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?

Like | Dislike | Share | Posted: Mon, 05/19/2008 - 07:39 | Post subject:

cliff3's picture
cliff3 | Joined: May 5, 2008 02:15 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

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.

Like | Dislike | Share | Posted: Mon, 05/19/2008 - 15:40 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hey!

Thanks for sharing all this information!

--------------------------
rescue-me-now.com

Like | Dislike | Share | Posted: Tue, 06/17/2008 - 00:27 | Post subject:

larry2's picture
larry2 | Joined: June 27, 2007 02:50 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

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

Like | Dislike | Share | Posted: Tue, 06/17/2008 - 02:26 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

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?

Like | Dislike | Share | Posted: Wed, 08/27/2008 - 10:20 | Post subject:

Niicss's picture
Niicss | Joined: October 3, 2005 11:54 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Welcome Carol.

The second mortgage lender can foreclose but after the sell the first mortgage company should be paid first and then the second mortgage lender will get his money. By the way, the person who buys the property in the auction will not be responsible to pay your unpaid debt. It is your debt and you are responsible to pay it off.

Like | Dislike | Share | Posted: Thu, 08/28/2008 - 06:23 | Post subject:

Caron's picture
Caron | Joined: July 19, 2005 08:37 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi carol,

welcome to our forums.

The person buying the property at the foreclosure auction does not become responsible for the first loan. Since the second lender wants to foreclose, either he or the borrower has to pay off the first loan. The second loan is subordinate to that of the first. So, the second lender and the borrower needs to talk to the first lender and inform them about the foreclosure. In most cases, the second lender has to satisfy the first and then recover his money from whatever is left behind.

Good luck

Like | Dislike | Share | Posted: Thu, 08/28/2008 - 06:40 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I am finding it difficult to make my mortgage payments and would like to know what are the financial and legal implications of a foreclosure

Like | Dislike | Share | Posted: Sat, 09/06/2008 - 21:07 | Post subject:

sara's picture
sara | Joined: July 5, 2006 03:16 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi journvic,

Foreclosure isn't the way out when you can't pay for the mortgage. I mean there are various other ways to choose from if you can't repay. You can opt for an alternative repayment plan or a loan modification. Or you may even [url=http://www.mortgagefit.com/refinance.html]refinance[/url] to a lower rate so that you'll save in interest. Just check out the 17 ways to avoid foreclosure .

Take care

Like | Dislike | Share | Posted: Mon, 09/08/2008 - 05:18 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

What is the liability to the borrower if they foreclose on their home. First time buyer, unable to meet mortgage payments and unable to get a fair price when selling. Can the lender attach paychecks and bank accounts?

Like | Dislike | Share | Posted: Thu, 10/09/2008 - 10:34 | Post subject:

Caron's picture
Caron | Joined: July 19, 2005 08:37 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Well, the lender can attach paychecks and bank accounts if you fail to pay off the deficiency payment, if any. However, if the lender hasn't declared foreclosure, I would suggest that you talk to him regarding any alternative options with which you can pay off the mortgage. You will find some of the alternative options at http://www.mortgagefit.com/foreclosure/17ways-avoid.html .

Good luck

Like | Dislike | Share | Posted: Fri, 10/10/2008 - 05:53 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

MY PROPERTYS VALUE IS $650000.00 IN THIS MARKET. i OWE $725,000.00 ON THE 1ST AND $140000,00 ON THE 2ND. I am in modification on the 1st and 4 months behind on the payment. My 2nd is 2 months behind and the 2nd lien holder is going to foreclose on the property by the end of the month if i dont pay the past due amount. Can the 2nd foreclose? with the property being upside down and if the 2nd forecolses and can not sell the propoerty to satify the first what happens next? once the sale goes through and there is not an offer to satisfy the loans what is the position of the 2nd ? and what is the next step for them?
last question, where does this put me whan all this takes place? :? :?

Like | Dislike | Share | Posted: Sat, 12/13/2008 - 13:03 | Post subject:

Niicss's picture
Niicss | Joined: October 3, 2005 11:54 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi JOHN

Did you speak to your second lender about a loan modification or forbearance? I think you should first try to negotiate with the 2nd lender and see if he agrees to any of the options.

The 2nd lender can foreclose the property. But as far as I know, if they foreclose, they will have to pay off the dues of the 1st lender as well. If the lender forecloses the property your credit will be badly hurt. It will be lowered by 250 points.

Thanks.

Like | Dislike | Share | Posted: Mon, 12/15/2008 - 00:55 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

don't pay for the 2nd loan is the ans.

Like | Dislike | Share | Posted: Fri, 01/16/2009 - 19:47 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

we wouldn't do that. we just want out from under such a silly, very abusive loan. we're not trying to evade paying bills.

Like | Dislike | Share | Posted: Fri, 01/16/2009 - 19:49 | Post subject:

jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Guest,

In my opinion, you should speak to your lender if you are not able to pay the mortgage dues. Once you inform the lenders, he may give you the option of loan modification. If you want to sell off the property, you can even apply for a short sale or a deed in lieu. You may even check given link to know more about ways to avoid foreclosure:
http://www.mortgagefit.com/foreclosure/17ways-avoid.html

Thanks

Like | Dislike | Share | Posted: Fri, 01/16/2009 - 23:18 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

if i renegotiate my 1st mortgage loan and my 2nd mortgage loan is charged off, and I do a Bankruptcy and Keep the home, what happens to the Charged off 2nd mortgage, does it stay attached to the home?

Like | Dislike | Share | Posted: Mon, 06/29/2009 - 11:54 | Post subject:

jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Sher,

It will depend upon the type of bankruptcy you file. You can request your second lender to withdraw the account from collections and include it in bankruptcy and try to get it discharged. If the second loan is not discharged, you can then negotiate with your lender and get a payment plan to pay off the mortgage.

Thanks

Like | Dislike | Share | Posted: Mon, 06/29/2009 - 21:38 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I would feel bad from them if they lost their jobs or really cannot afford it. But I was told that it is being a trend and being recommended in the Indian community in SF Bay Area to take advantage of the goverment assisted program. It is sad that these people are selfish and irresponsible. My next door Indian neighbor was able to get the 2nd loan (equity line) for $350K soon after they purchased the house. She is a mortgage broker. They put down 15% on the $1.5M home in early 2006. Now they are on the second notice of forclosure and already cash out the $350K to buy new BMW SUV, Mercedes, and family vacations. Per my research, they have not been paying the property tax and stop making the mortgage for almost a year now. My question is this can the lender (2nd mortgage) still can go after them? I know the prim. lender will let them go for free since the Obama signed the new law for the foreclosure. Several other Indians neighbors are talking to me and that they are planning to do the same. They told me I should do it too since my house is also $200K under water. I cannot see myself doing it. I am obligate to my responsibility that I have commited. But it would really help to get to loan modification for the 30 fix term. But I cannot since my home is under water and both me and my wife still have job. However, I felt that goverment is not helping out good person like me, but only the bad one. :-(

Like | Dislike | Share | Posted: Wed, 08/12/2009 - 01:13 | Post subject:

jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi ikey,

Though your home is underwater and both of you have your jobs, you can still apply for a loan modification. You will have to contact your lender and inform them about your hardship in paying off the loan. If the lender is convinced, he would accept your request. Thus, the lender would reduce your interest rate and increase the term of the loan.

Thanks

Like | Dislike | Share | Posted: Wed, 08/12/2009 - 23:17 | Post subject:

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