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What happens in a second mortgage foreclosure.?

A house is being foreclosed and posted in the news paper. I did a title search and the current foreclosure is for the second mortgage. Does anyone now what happens to the first loan. If I bid and won would I get the house.

I was under the impression only the first lender had the right to sell the house to secure their money and the second lender was left to fend for themselves / take it up personally with the borrower. I am confused as to why the foreclosure of the second mortgage is in the paper.

Thanks for any help.

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3 Responses to "What happens in a second mortgage foreclosure.?"

  1. SASAUN says:
    Your correct in the second half of your question. Second mortgage can’t proceed a first mortgage. As long as they are current on their first mortgage then the forclosure proceeding for the entire property is slim. the first mortgage will always be paid first and the second follows. Chances are that you will hold a lien against the home for the amount you purchased, but that doesn’t mean you will receive the money if a full forclosure takes place. The fist mortgage holder will collect as much as they can and in some cases they can sell the property at a very low amount, which leaves you high and dry to collect anything.
  2. Roxann Colter says:
    To foreclose, the second lien holder has to pay the first off in full. Slim chance there will be anything left for the second to get after that occurs.
  3. foreclosurefish_com says:
    Any lienholder can try to force a sale of the property through foreclosure, but usually only the first mortgage will get paid off through the proceeds of the sale. It just makes more sense for the second mortgage to try to work with the debtors to find a solution, since they wouldn’t get anything from a sheriff sale.

    If you placed the bid and won, the proceeds of the sale would be distributed like any other foreclosure. The property taxes would be paid first, since the bureaucrats need to get their hands on the money as quickly as possible. Then the first mortgage would be paid off with as much of the proceeds as possible.

    Then any other liens, including the second mortgage, would be paid in order of when their lien was filed. If there is enough money to pay all of the second mortgage, then they get all of the rest of the money until they are paid off. Then anything remaining goes to other liens or to the homeowners are their gain from the sale. If there is not enough to pay off the second mortgage (or even all of the first mortgage), then the second will not be paid off at all or in full. It will be up to the mortgage company to sue afterwards for a deficiency judgment (an unlikely occurrence).

    So, just because it is a second mortgage suing for foreclosure, it won’t really change how the liens are paid off in the end. You’ll still end up with a title that has had the liens on it discharged through the county foreclosure auction.

    Hope that helps.
    ForeclosureFish

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