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Second Mortgage Foreclosure Rights Article
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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.
Second Mortgage Foreclosure Rights Specific links
Second Mortgage Foreclosure Rights News
Calif. homeowners with foreclosed second mortgages targeted by firm - News10.net
 abc7news.com | Calif. homeowners with foreclosed second mortgages targeted by firm News10.net By Rick Jurgens Adding new uncertainty in the state's ongoing mortgage crisis, a Texas company is aggressively pursuing hundreds of Californians to collect second-mortgage debt - on homes they've already lost through foreclosure. Firm targets CA homeowners with foreclosed 2nd mortgages Texas firm targets Calif. homeowners with foreclosed 2nd mortgages |
Texas company targets foreclosed owners' second loans - San Francisco Chronicle
Texas company targets foreclosed owners' second loans San Francisco Chronicle A Texas company that is aggressively trying to collect second-mortgage debt from hundreds of Californians is facing a class-action suit in Santa Clara County that contends it is carrying out an "insidious and illegal debt collection scheme. |
Letter: Some law firms refuse settlements that can avoid foreclosure - TCPalm
Letter: Some law firms refuse settlements that can avoid foreclosure TCPalm Just when it seemed the foreclosure crisis was finally beginning to correct itself, a new form of fraud has emerged. It involves some of the law firms that represent second-mortgage holders. To the credit of many of the major banks that hold the first ... Scottsdale, Arizona Short Sale Realtor / Specialist |
React & Act: What is second-mortgage debt? - California Watch
 California Watch | React & Act: What is second-mortgage debt? California Watch Heritage Pacific Financial sued Trejo to keep a bankruptcy judge from erasing an $88000 second-mortgage note against a house Trejo lost through foreclosure in 2008. Trejo won, but the firm has appealed. To understand Rick Jurgens' article on the ... Borrower's "show me the note" argument fails to halt foreclosure |
Foreclosure victims sued - ABC7 investigation - abc7.com
 abc7.com | Foreclosure victims sued - ABC7 investigation abc7.com The company says California law allows them to collect on second mortgages where they can prove borrowers committed fraud. Several years ago with the housing market in panic, Heritage Pacific bought 40000 second mortgage notes on foreclosed homes in ... Foreclosed? That May Not Be the End of It |