Can My 2nd Mortgage Take My House?

[California]

If I am current on my 1st mortgage, do I also have to be current on my 2nd in order to keep my house?

I was under the impression that the 2nd mortgage cannot foreclose on the property unless there is equity in the house that exceeds the value of the 1st mortgage..

Could the second mortgage file a motion to lift the automatic stay on a house with no equity?

[Stilltheone]

That's a good question. I was always under the impression that either one could foreclose on you. If what you're saying is true, can you imagine how many people would just stop paying the second mortgage, myself included? I have a HELOC with Countrywide/BOA. My mortgage is $260K total, worth about $235K if I'm lucky. Now, both of my mortgages were discharged through bankruptcy, but I keep paying on them.

I'm curious to see answers in this one.

[Chowder]

Now, both of my mortgages were discharged through bankruptcy, but I keep paying on them.

Did you try to get the second reduced ?

[OhioFiler]

That's a good question. I was always under the impression that either one could foreclose on you. If what you're saying is true, can you imagine how many people would just stop paying the second mortgage, myself included? I have a HELOC with Countrywide/BOA. My mortgage is $260K total, worth about $235K if I'm lucky. Now, both of my mortgages were discharged through bankruptcy, but I keep paying on them.

I'm curious to see answers in this one.

There's a great thread on here recently discussing this idea. It's highly unlikely the 2nd would foreclose as they would have to make the 1st whole and there would be nothing left for them.

One suggestion I really like is stop paying the second and force them to take a settlement.

As long as your house remains upside down they can't do anything. Od course the lein remains and if you ever sell you will have to pay them.

[California]

Did you try to get the second reduced ?

This has me worried because they have asked me to reduce it. What is the relevance if I have or have not reduced it?

[StartingOver08]

[QUOTE=California;299087]This has me worried because they have asked me to reduce it. What is the relevance if I have or have not reduced it?[/QUOTE]


Who asked you to reduce it? The lien holder?
If it was the lien holder they are just looking to get any $$ from you to make their position better! LOL

I think what Chowder and OhioFiler are referring to is to stop paying on your second to force them to the negotiating table so you can get rid of it. Several of the people here are negotiating for 10% of the mortgage amount with a release of lien. It is worth trying....

Search the recent posts regarding 2nd mtgs and Ch 7's -

[Chowder]

I think what Chowder and OhioFiler are referring to is to stop paying on your second to force them to the negotiating table so you can get rid of it.

That's it alright.
Lord I wish I did not pay off my second last year.

[kw1025]

the 2nd cannot forclose, if it is not the same bank as the first. Any subordinate loan is trumped by the first. Is the 2nd a HELOC or a 2nd mortgage? They are not the same. If the property is up for grabs, the 1st will normally buy out the 2nd for pennies on the dollar, and the second becomes an unsecured creditor. Banks are getting killed with this right now, becuase values were so much higher a few years ago.

[justplaintired]

This makes me wonder if we made a mistake. We have a 2nd mortgage, which in all likelihood is over the amount we could see this house for. The interest rate isn't great 7.25. We have kept current on this loan, but now I am wondering if that makes sense. But sense we have filed, we probably are stuck with this now.

Anyone know for sure how this works with a second mortgage. Can you file on it and keep paying the first? What would happen then? Will they still negotiate if your in BK? Would love to hear some advice on this one.

[liz417]

This makes me wonder if we made a mistake. We have a 2nd mortgage, which in all likelihood is over the amount we could see this house for. The interest rate isn't great 7.25. We have kept current on this loan, but now I am wondering if that makes sense. But sense we have filed, we probably are stuck with this now.

Anyone know for sure how this works with a second mortgage. Can you file on it and keep paying the first? What would happen then? Will they still negotiate if your in BK? Would love to hear some advice on this one.

I don't have a 2nd mortgage, but I've read here that AFTER you are discharged, you could call up the 2nd and negotiate a new balance, payoff amount. I've read recently (sorry, can't remember the posters name) that they settled for $10k on the 2nd loan! I guess it bets getting nothing!
Worth a try. Good Luck!

[bk2009]

Most people keep paying through the bk process. It's when they're discharged that they stop making payments to the second, save every dime that they can so that when the second is ready to settle, they've got the cash to settle with them.

This can work out well if your primary mortgage is more than the value of the house (especially the foreclosed value, which often go for even lower price tags) as most seconds will not foreclose because they would have to buy out the first mortgage to get to any money. For example, say you owe $200k to your first mortgage and you owe $50k to your second. Your house is currently only valued at say, $150 by tax standards (as that's an easily accessible number for lenders to look at). So, if the second wishes to foreclose on you b/c you quit paying, they have to pay the first $200k in order to foreclose. Then, they turn around and foreclose - maybe after it's all said and done, they get $100k for the house. So, besides legal fees, they paid out $200k to the first to foreclose and then they lost $100k selling the property (plus taxes, legal fees, and anything else that they might have to do like yard maintenance or winterizing). As you can tell, it's not in there best interest to foreclose in a situation like this. Instead, as you slip further behind on payments, you get the upper hand. At this point, they want ANYTHING from you.

The gamble of course is that house values could go up, the second could not want to barter with you and suddenly they could foreclose on you if suddenly the house is worth $300k and there is equity. Sure, the house value may not skyrocket overnight, but as you pay the primary down, you lower the amount you owe (duh, right?) and then the magic number of where they might foreclose could be looming. Or, perhaps your primary loan is only at $100k and the value is at $90k, eventually as you keep paying, the amount will equal out and then you'll have equity. Will some seconds hold on to those that are in an area expected to rebound, or to those that the difference isn't that great? Also, what happens if you want to refinance or sell? And then, some might sell of to JDB who might harass you or who might wait for there to be equity in the home.

It's a new ploy, so it's going to take a bit for things to shake out to see what happens.

[HHM]

Legally, the 2nd mortgage has the right to foreclose upon a default.

See this blog post that explains the issues.

http://askmethner.com/?p=450

[jribe]

If I am current on my 1st mortgage, do I also have to be current on my 2nd in order to keep my house?

I was under the impression that the 2nd mortgage cannot foreclose on the property unless there is equity in the house that exceeds the value of the 1st mortgage..

Could the second mortgage file a motion to lift the automatic stay on a house with no equity?

pull out the loan docs you signed and read them. In there it will say this is putting an interest on the property and if you're in defualt there are "remedies" to defualt. One would be to take the house. They can foreclose if they want to. The issue is that they are in "second" position; because it's your home equity- or "2nd" loan. The 1st mortgage would be fufilled first- then whatever is left over goes to the second mortgage lender. That is why there's usually higher interest rates and more fees- it's more risky to be in 2nd position. If you have both with the same lender- i would say they would foreclose.

[jribe]

the 2nd cannot forclose, if it is not the same bank as the first. Any subordinate loan is trumped by the first. Is the 2nd a HELOC or a 2nd mortgage? They are not the same. If the property is up for grabs, the 1st will normally buy out the 2nd for pennies on the dollar, and the second becomes an unsecured creditor. Banks are getting killed with this right now, becuase values were so much higher a few years ago.

They are the same thing! What makes you think there is a difference? I would like to see your explanation. lol. Not to be mean, sorry. But it's the same thing..

[Stilltheone]

Did you try to get the second reduced ?

No, I didn't even know that was an option during our bankruptcy. Should I try to get it reduced now?

There's a great thread on here recently discussing this idea. It's highly unlikely the 2nd would foreclose as they would have to make the 1st whole and there would be nothing left for them.

One suggestion I really like is stop paying the second and force them to take a settlement.

As long as your house remains upside down they can't do anything. Od course the lein remains and if you ever sell you will have to pay them.

Our house is definitely upside down. Realistically, we could sell it for $200K. We owe $260K. BOA has our HELOC with $72K on it. Would they go after us for $12K?