So, if the second-mortgage holder foreclosed, the foreclosure sale proceeds wouldn’t be sufficient to pay anything to that lender . ... That’s because all the money from the foreclosure sale would go to the senior lender. But the second-mortgage lender could still sue you personally for repayment of the loan.
What happens to first mortgage if second mortgage forecloses?
The lender holding a second mortgage necessarily must have provided the mortgage loan after the property owner already took out a first mortgage loan . Because the first mortgage loan was first in time, it is also first in right, which means foreclosure on the second mortgage loan will not extinguish the first mortgage.
Can a second mortgage holder foreclose on a property?
A second-mortgage holder can initiate foreclosure proceedings even if the first mortgage is not behind on payments. The second-mortgage lender must still take all the necessary steps in the foreclosure process, and must also notify the first lender of the intention to foreclose on the property.
What happens when a mortgage company forecloses?
Foreclosure means that your mortgage lender can legally repossess your house due to nonpayment. They can then sell your house to help repay the debt you owe on it . This is true whether you are behind on your first or second mortgage.
Can my second mortgage be forgiven?
Your second lender may voluntarily forgive your second mortgage , including a home equity line of credit or home equity loan. ... Even if your lender lets you off the hook for the second mortgage, you may face an increased tax liability because the IRS treats certain cancelled mortgages as income.
Can a second mortgage be used as a security instrument?
Second deeds of trust are typical in California for two reasons. First, California home loans usually utilize deeds of trust rather than mortgages as security instruments because California is a non-judicial state. Non-judicial states do not require court permission for lenders to foreclose.
Can you sell a house with a second mortgage?
A second mortgage should have little or no effect on a homeowner’s ability to sell her home. While the effects on buyers are nonexistent, sellers must pay off second mortgages just as they must pay off first mortgages.
Does Chapter 13 get rid of second mortgage?
“Lien stripping” in Chapter 13 bankruptcy allows certain homeowners to get rid of a second mortgage or home equity line of credit. ... If your house has gone down in value since you bought it, a Chapter 13 bankruptcy may help you to get rid of your second mortgage.
Why is my second mortgage Not on my credit report?
There’s a reporting delay
One of the most common reasons you don’t yet see your mortgage on your credit report is because there’s been a simple reporting delay . For most people, it can take anywhere from 30 to 90 days for a new or refinanced loan to appear.
How can I get rid of a second mortgage?
Filing for bankruptcy can eliminate your second mortgage debt. If an appraiser determines the value of your home is less than your first mortgage, or is upside down, Chapter 13 lien stripping may be possible. The bankruptcy court essentially converts your second mortgage into an unsecured debt.
Can a mortgage company refuse payment?
Mortgage lenders don’t refuse payments from borrowers in good account standing . If you can’t convince your mortgage lender to accept payments from you, and your loan is in danger of default, you may need to speak with a qualified attorney to discuss your options.
Do you still owe the bank after foreclosure?
After foreclosure, you might still owe your bank some money (the deficiency), but the security (your house) is gone. So, the deficiency is now an unsecured debt. ... The security agreement gave your lender the right to foreclose. Once the foreclosure is over, the security agreement is no longer in effect.
What is the waiting period for someone who has had a foreclosure before they can buy another home?
Waiting out the clock
Many lenders require a minimum waiting period after a foreclosure before you can apply for a new mortgage loan: three years for FHA loans . seven years for Fannie Mae/Freddie Mac loans . two years for Veterans Affairs loans .
How do I settle my second mortgage after Chapter 7?
- Contact your second mortgage lender to discuss the debt. ...
- Make an offer to your second mortgage lender. ...
- Remind your second mortgage lender that you know your rights. ...
- Put your agreement in writing.
How can I get my mortgage debt forgiven?
- Begin by contacting your lender to ask about mortgage forgiveness options. ...
- Gather your financial documents. ...
- Write a letter detailing your financial hardship. ...
- Request a letter from your lender that states precisely the terms of your mortgage forgiveness arrangement.
What is a 2nd mortgage on home?
A second mortgage is a loan that uses the equity in the borrower’s home as collateral . When you apply for a second mortgage you are putting another loan on a property with an existing loan. ... Any remaining funds then pay off the second mortgage.
