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I am going into foreclosure. A private lender has a 2nd mortgage on my property. What will happen to that?

Multi unit property has a recorded 2nd mortgage of 22k on it from a private individual. If the property gets foreclosed on, will I still be required to satisfy it? What is the lender accepts a short sale? WIll I be required to pay the 2nd mortgage then?

Public Comments

1. go to www.hud.gov asap. contact them this is free govt info. to help you stop the foreclosure. you can pay the itnerest for a while and not the loan. see fannie mae and freddie mac too. go now!!! call them toll free. a fed govt resource.
2. In most cases, the 2nd mortgage lender will buy out the first mortgage guys at the sheriff's sale. It's their best way to protect their money, if there's enough equity to justify it. HUD is a good resource. Also check ACORN. Or an attorney.
3. The first mortgage company has to share any available proceeds---after getting their own money-- with the second lien holder. If the sale is not enough to satisfy the debt, the second lien holder may pursue you for the remainder.
4. If the second mortgage want to protect his/her interest he had better bring the first mortgage current and do the foreclosing himself. The first mortgage is only out to protect it's interest. So at the bid or sale the minimum bid will be whatever is owed on the first mortgage, unless the second steps in to protect his interest. So this person that is in 2nd position should call the first, find out what ever it cost to bring them current and immediately send them this amount as well as find someone to take over the foreclosure from the first. Now when the sale date occur if you do not bring the mortgages current the minimum bid price becomes what ever is owed on the first and the second. If no one bids enough make the minimum bid then the person that is in second position becomes the new owner of the property. He just have to remember that he now have a first mortgage to pay. Normally if the lender private or intuition get a house back in foreclosure they will not normally go after the ex-owner like a car dealer. The collateral is the house and they have that. I hope this has been of some use to you, good luck. "FIGHT ON"
5. Well since it's a private individual this may become more of a problem for you. In my state Michigan, the home will go to sheriff sale. At sheriff sale the 2nd lien holder my purchase the property for at least what you owe on the first. If the 2ND does not buy it the first will and at the end of the redemption period the 2nd lien falls off. During your redemption period you can sell the home to satisfy both liens. Now here's what can get tricky. The second lien holder being a private individual is going to want this money alot money than a large bank like JP Morgan. Not to say they don't want their money too but, they're flooded with this kind of stuff. So if the 2nd buys it at sheriff sale, any loss on the 2nd part could mean a lawsuit for you. You are responsible for any legal fees or loss that the lender suffers. Now you could try a short sale, but from my experience the 1st won't budge. Why should they? They will get your property and have a decent equity position. The 2nd is who you will have to negotiate with. Even if the 2nd agrees to take less so you can sell the house he can still sue you for the difference. Plus if lender takes less the IRS considers it debit relief and will tax you on your "gain". Worst of all the if the 2nd does not buy the property at sheriff sale they can sue you for that entire 2nd mortgage. Now with it being a private individual I would say that the chances of that person pursuing you are quite good. Good Luck!
6. I can help you save your house.... we need to talk
7. If the house if foreclosed on, all of the liens on the property will be wiped off. The second lienholder would be able to sue you for a judgment, but that is the only case in which you'd be required to pay back the second mortgage. Otherwise, you got the $22,000 loan by putting up the house as collateral, and the second lienholder knew there was a first lien that would be satisfied first if there was ever a foreclosure sale. Sorry, but that's the price you pay for loaning money on a property that already has a lien on it. If the first lender accepts a short sale and you find a buyer, that does not affect what you owe on the second loan. You can get a short sale from the second lienholder, as well, if he is willing to take less on the property. A short sale lets you sell the property for less than what you owe and you can negotiate down as far as you can with any of the parties who hold liens on the house. The second mortgage will show up in a title search for the property for the full $22,000, but the total amount you have to pay them when you sell the property is the current payoff. So if they give you a lower payoff than what you actually owe right now, then you will only have to pay the lower amount. The lienholder wouldn't be able to come after you for the rest of the money. By accepting the short sale, the lender agrees to consider the loan paid in full for a lesser amount than originally. They forgive the rest of the debt you owe them, so they can't sue for an amount that was forgiven. Good luck, hope that helps a little. ForeclosureFish http://www.foreclosurefish.com/