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Second Mortgage Foreclosure vs. a First Mortgage Foreclosure
from:Getting a mortgage is a large step for homeowners. Many make jokes about mortgages and buying their homes calling it "signing their life away". Although it's not quite that serious, taking out a mortgage loan is a huge step. You'll be agreeing to make monthly payments, which include principal and interest, for many years, sometimes up to 30 years. Often by time you've finished paying off your loan, you'll have paid for it two times or more with the interest included.
If the borrower fails to make the scheduled payments on time, they risk losing their home to foreclosure. No one comes out ahead in the foreclosure, not the lender or the borrower. Whether it's a first mortgage foreclosure or a second mortgage foreclosure, it's a big headache for everyone involved. Banks don't like having an REO (Real Estate Owned) on their record and borrowers don't want to lose their home.
In addition to losing their home, they'll have a poor credit rating for many years, which will make it difficult for them to get any credit in the near future. Regardless of whether it's first or second mortgage foreclosure, their credit will be affected the same. You probably understand what a mortgage and mortgage foreclosure is, but many are unfamiliar with second mortgages or second mortgage foreclosure.
An individual buys a home for $100,000 and has a $20,000 down payment. They then take out a mortgage loan for $80,000. We're assuming the home is worth at least $100,000 because banks usually borrow up to 80% of the appraised value of the home. A few years later, the borrower decides to take out a second mortgage. He may be having difficulties making his first mortgage payment and needs cash to be caught up or may also just need extra cash for some expense.
At this time, his home is appraised at $120,000 and his first mortgage loan balance is down to $70,000. He, therefore, has $50,000 of equity to borrow on his home. Following with the 80% rule, he can probably get a second mortgage for up to $40,000. The second lender's name will be on the mortgage under the first mortgage lender because the first has precedence on the loan. Therefore, at this time the borrower owes $70,000 on his first loan and $40,000 on the second loan.
If the borrower cannot make payments on the loans and the loan goes into first mortgage and second mortgage foreclosure, the first lender will get their money before the second. If the home is foreclosed and sold for $100,000, the first lender will get the $70,000 owed to them, with only $30,000 left so the second lender will only get $30,000.
If there is a second mortgage foreclosure but not a first mortgage foreclosure, the second lender may be allowed to make payments to the first lender. Unless it can't be avoided, try to avoid a second mortgage for all concerned.
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FORECLOSURE: US Bank v. Peter J. Kaehler, Case 10CV6 - Hudson Star Observer
FORECLOSURE: US Bank v. Peter J. Kaehler, Case 10CV6 Hudson Star Observer TERMS: Pursuant to said judgment, 10% of the successful bid must be paid to the sheriff at the sale in cash, cashier's check or certified funds, payable to the clerk of courts (personal checks cannot and will not be accepted). |
FORECLOSURE: GMAC Mortgage v. Susanne T. Crownhart; Case 11CV553 - Hudson Star Observer
FORECLOSURE: GMAC Mortgage v. Susanne T. Crownhart; Case 11CV553 Hudson Star Observer TERMS: Pursuant to said judgment, 10% of the successful bid must be paid to the sheriff at the sale in cash, cashier's check or certified funds, payable to the clerk of courts (personal checks cannot and will not be accepted). |
Foreclosed homes irk neighbors - Altoona Mirror
Foreclosed homes irk neighbors Altoona Mirror The next step, Gieg said, is to reduce the liens to a judgment, which would allow the municipality to auction the house at a sheriff's sale. That would require a series of legal warnings, a process that borough officers said is already under way. |
CondoTalk: Collection of unpaid assessments - Chicago Daily Herald
CondoTalk: Collection of unpaid assessments Chicago Daily Herald By David M. Bendoff Associations are seeing record amounts of assessment liens being extinguished when a unit is sold at a judicial sale at the conclusion of a mortgage foreclosure. That doesn't necessarily mean it's the end of the road for the ... |
South Florida cities target bad-neighbor banks with desperate tactics - Sun-Sentinel
South Florida cities target bad-neighbor banks with desperate tactics Sun-Sentinel A few months later, New York followed: Lenders there now must maintain vacant properties in the period between winning a foreclosure judgment and taking title at an auction or sheriff's sale. Florida, a pro-business state with a powerful banking lobby, ... |