Foreclosure On 2nd Mortgage
What Happens to Second Mortgage After Foreclosure on the First?
Scenario:
I have a foreclosure soon to take place on my first mortgage. What happens to the second mortgage if it is paid up to date? I was so stupid that paid a company XYZ $1000 to negotiate a plan for paying the first loan. they promised me that the first mortgage lender would surely accept their plan. But they dropped the ball and the first lender won`t take anything. Now, it`s just 10 days left for the foreclosure sale. The lender is simply trying to blame it on me. Is there anyway I can get back the $1000? What`s going to happen when they sell off the home? Will the sheriff come and keep all my possessions if I`m still there in the property? I`m so upset, I could have used the $1000 towards the first mortgage instead of paying XYZ. What do you suggest now?
Solution:
Once the first mortgage lender forecloses your property, he will sell it to the highest bidder in the foreclosure auction sale. The sale proceeds will be used to pay down your first loan and then the second. If there is a shortage, and the first lender fails to retrieve the entire first loan balance, he may give you a time period as per the state or bank laws after which you`ll have to vacate the property. There`ll be a date set by the Sheriff on which he`ll come and evict you if at all you don`t move out.
Now, when the first lender carries out a foreclosure sale, the second mortgage lender can take the following steps:
- File a deficiency judgment against you if the foreclosure sale doesn`t cover the entire second mortgage loan balance.
- File a civil judgment against you in court or garnish your income.
- Bid for the property at the time of foreclosure sale in order to recover the money the second lender has invested.
- Even after the first lender sells off property, the second lender can pay off the required amount of money to the first and get back property at the end of the redemption period.
Apart from the steps above, the second lender can also charge-off any unpaid debt after getting a part of the sale proceeds when the first loan is paid off. This means that the second lender considers the debt as uncollectible. But you still don’t lose your obligation to pay off second mortgage after foreclosure.
A 2nd mortgagecharge-off will have a negative impact on your credit score. So, try to repay the charged-off debt and request the second lender so that he reports to the bureaus who can then update the status on your credit report as "Paid Charge-off" or "Settled Charge-off".
In case you don`t pay off the charged-off debt, it may be considered as income and depending upon the state laws, you may have to pay tax on the unpaid debt. However, if your lender forgives the unpaid debt, you may not have to pay tax provided you qualify for tax relief on mortgage debt forgiveness.
What I suggest is, save up your money for rent because foreclosure is inevitable as it`s only 10 days left for the sale. Also, try to negotiate with the second lender so that he accepts the amount that you can pay off in easy installments. This will help you avoid a charge-off being reflected on your credit report.
About the Author
Samantha Taylor is a contributing Financial Writer, Moderator and Community Mentor of MortgageFit (Largest Mortgage Community). She specializes in mortgage and real estate field.
Second Mortgage Lender Can Foreclosure
Check out our suggested links for Foreclosure On 2nd Mortgage and come bookmark this site for additional information. We appreciate your time and suggestions for other articles about Foreclosure On 2nd Mortgage or something we forgot to mention.
|
|
The Foreclosure Survival Guide (Paperback) $16.33 Foreclosures climbed a record 81% in 2008, and over 860,000 families lost their homes. In 2009 we will likely see three million more foreclosures as temporary postponements end and homeowners are increasingly incapable of making their mortgage payments in the continuing brutal recession.Written by a practicing bankruptcy lawyer who has helped hundreds keep their homes or come out of foreclosure financially sound, The Foreclosure Survival Guide provides practical information that will help readers make the best decisions and find the best solutions possible.It explains how to: ? evaluate factors and risk when determining whether to keep the house ? discover and utilize opportunities and resources for a lender ?workout? ? use Chapter 7 to buy time while considering a workout or other options ? assess legitimate offers from mortgage brokers for payment of mortgage ? recognize mortgage payment scams ? use Chapter 13 bankruptcy to save a home ? utilize ?last resort? strategies if all else fails Containing foreclosure law information for all 50 states, and stuffed with easy-to-use legal charts, sample forms and?most importantly?encouragement and big-picture perspective, The Foreclosure Survival Guide has become the nation`s bestselling book on foreclosure. The 2nd edition is updated with the latest federal legislation and bank-implemented foreclosure-delay programs which offer homeowners even more ways to keep their homes. |
|
|
Foreclosure Nation (Paperback) $16.06 A Florida real estate attorney/educator explains how the US got into the present credit mess fueled by subprime mortgage loans, and offers consumers advice about how to deal with threatened foreclosure. Despite government and Wall Street culpability, Olefson is hopeful about needed reforms. The book includes a glossary; sample mortgage loan application, mortgage modification solicitation, foreclosure complaint, and related legal forms; government agencies and regulations; consumer advocacy resources; and a distressed borrower loss mitigation worksheet. Annotation )2009 Book News, Inc., Portland, OR (booknews.com) |
|
|
The Foreclosure of America (Paperback) $9.8 Now in paperback-an inside look at Countrywide Home Loans and the mortgage crisis, from a former mortgage lender executive. In July 2004, Adam Michaelson attended a high-level meeting at Countrywide Financial headquarters about a new loan product that would allow borrowers to pay less than their minimum monthly payment. The "finance jocks" believed that the booming housing market would only get bigger, supporting homeowners in a cycle of borrowing against their houses and refinancing later. They were wrong. And when the bottom dropped out, Countrywide suffered the consequences-as did millions of Americans. With an insider`s knowledge and thorough reporting on the impact on American families and the ripple effects on the economy, Michaelson examines the marketing of a mirage and the bad business decisions that destroyed a company, confronts the ethical questions that have arisen in the wake of the foreclosure crisis, and offers creative proposals to prevent such a meltdown from ever happening again. |
|
|
Mortgage Answer Book (Paperback) $16.78 What kinds of mortgages are available to me? How do I get a mortgage? How large a down payment do I have to put down to get a mortgage?For most people, buying a house is the largest purchase they will make during their lives. However, it is the loan to buy the house that can add hundreds of thousands of dollars to your overall cost. The Mortgage Answer Book answers the most important questions someone buying a home needs answered before obtaining a mortgage. With insider tips, strategies, and insights that are critical for anyone applying for a mortgage. The Mortgage Answer Book is an authoritative reference, providing sound advice and immediate answers to your most pressing concerns.Written by an attorney, The Mortgage Answer Book answers your most important questions including:*How do interest rates affect me being able to purchase a home? *How can I fix a problem on my credit history? *What are prepayment penalties? *How can I figure out how much money I will be able to borrow? *How do I refinance my mortgage? *What is the difference between a fixed mortgage and an adjustable rate mortgage? *How do I avoid foreclosure and losing my home? Written in an easy-to-read, question and answer format, The Mortgage Answer Book helps you understand how to successfully finance a home. |