relationship of 2nd mort. to the 1st

[1967]

The separate bank that has the 2nd mort, or line of credit is calling every day. The primary bank for the 1st is pretty quiet so far. How does this work, can the holder of the separate line of credit force a foreclosure, or do they really have no say because it's controlled by the primary lender?

We are just starting the chapter 7 process so I'm not to worried but I'm really confused on how much power the holder of the 2nd mort has.

thanks

Mike

[overspent]

The second has to pay off the first out of the proceed so they may not foreclose at all. In my case, based on comparable sales, value of my house is just under the amount I owe on the first. I stopped paying both first and second 2 months ago and working with the first for a mod and ignoring the second for now.

[SobStory]

I think it depends on the numbers. The 2nd mortagor takes a terrible risk in paying off the first, so I think they would only do it if you had significant equity. The second mortagor threatened to foreclose on me. I actually laughed at them on the phone. I did not mean to be rude but I knew the debt collector for the 2nd was lying. It would make no economic sense for them to pay off the first to take the house. They would call occassionally but that was it.

[ediev]

New to the board here - really good advice! I'm still pouring through all the valuable information, but had to stop to reply to this thread, simply because I am here BECAUSE MY 2ND MORTGAE (HELOC) IS FORECLOSING ON ME!!! Briefly, I haven't paid them in 6-7 months. I was in the process of a loan mod with my first and IF i got something acceptable, i was going to turn to the 2nd for some kind of workout. Well...the 2nd decided they were not going to wait, and I was offically served a few weeks ago.

Let me point out - I owe $225,000 on the first and $100,000 on the second. Zillow appraises my home at $215,000 which i know for a fact is way more than what homes are selling for in my neighborhood (more like $125,000). Regardless - the 1st alone, is not covered even with Zillow's estimate.

But the 2nd has proceeded with foreclosure. Funny thing is, now that i stepped back and took a look at what I was preparing to do with loan mods, etc., i find myself asking "why"? I am soooo underwater, and i don't particularly love the house....sooo....they can have it! (so refreshing to come to that determination).

I will eventually post and ask my own questions, but i did want to point out that absolutely 100% yes, a 2nd can foreclose! Even when nothing to gain - I'm still scratching my head on this one! I don't know how quickly they will proceed if at all. I have hired a foreclosure defense attorney, strictly to give myself as much time as possible to save some money. I'll let you all know when I know...but thought it was important to share, as I was given the same impression about 2nd mortgages.

[ryan]

To Ediev: That is quite interesting, and I'm sorry for you that they are being so bull-headed.
I also have a Heloc second going into default and am also curious if they will sue for foreclosure? Property has almost enough equity to make first lender whole, but ZERO for second lender and property is dropping in value every month.

I will be asking the same question if they do: Why?

[ediev]

Ryan, thanks for your sympathies- but really I'm happy they forced me to take a look at the bigger picture. I should never have attempted to modify - I should have saved the $7,000+ I have sent to my 1st in 5 trial payments (with no end in sight-and who knows if they will approve me). The 2nd forced me to look at the bottom line and ask myself: "is it really worth it for me to modify"???? The answer all along should have been "no". I was just trying to be "responsble". But the thing is I was choosing to be responsbile to the banks - I am now choosing to be responsible to my family and our future. I never intended to live in this house/neighborhood for more than 5 years (I'm going on 9). If I modified, I would essentially be stuck here for at least another 15 years before I could unload this money pit. So "phew" glad the 2nd forced me to wake up and be responsible!

However, I'm still wondering, like you "why"? I read a lot. And 99.9% of what i hear is the 2nd if no equity in the property will not attempt a foreclosure. I'm proof that isn't true. All I can determine is they think my house has equity? Who knows? I hope for the sake of people who are attempting to actually keep their homes that this is not a new trend and i just wanted to point out that it can happen (hopefully its a fluke). Despite my personal situation, I still don't think there's need for anyone to panic...my bank is just stupid.

[onwards]

However, I'm still wondering, like you "why"? I read a lot. And 99.9% of what i hear is the 2nd if no equity in the property will not attempt a foreclosure. I'm proof that isn't true. All I can determine is they think my house has equity? Who knows? I hope for the sake of people who are attempting to actually keep their homes that this is not a new trend and i just wanted to point out that it can happen (hopefully its a fluke). Despite my personal situation, I still don't think there's need for anyone to panic...my bank is just stupid.

Do you mind letting us know which bank it is? is it the same bank as the first by any chance?

Also, have you actually been served with foreclosure paperwork? or is it yet another threat tactic?

[ediev]

Not a threat, unless a sheriff knocking at my door with a stack of papers which indicate I have 20 days to reply to the "Summons" sounds like a threat? I actually told the sheriff, it must be some kind of mistake cause I'm in a loan mod program with my first (BOA) and he said - oh no, it's not BOA it's from Regions (my 2nd)...I guess that answers your other questions too.

Now that you ask, I've never been served with anything before in my life, so i don't know what it's supposed to look like - just that a guy with a badge gave it to me & said "you have 20 days". But considering I took it to a foreclosure attorney, who did not question its legitimacy, I'm assuming it is.

This is all so foregin.

[onwards]

Not a threat, unless a sheriff knocking at my door with a stack of papers which indicate I have 20 days to reply to the "Summons" sounds like a threat? I actually told the sheriff, it must be some kind of mistake cause I'm in a loan mod program with my first (BOA) and he said - oh no, it's not BOA it's from Regions (my 2nd)...I guess that answers your other questions too.

Now that you ask, I've never been served with anything before in my life, so i don't know what it's supposed to look like - just that a guy with a badge gave it to me & said "you have 20 days". But considering I took it to a foreclosure attorney, who did not question its legitimacy, I'm assuming it is.

This is all so foregin.

This is fascinating. Thank you for sharing; I have never heard of a financial institution making an emotional decision before (which it would have to be for them to decide to waste another $100K+ just for the pleasure of evicting you). Do the laws in your state allow them to sue you for the deficiency post-foreclosure? if so, maybe they are confident of their ability to recoup their loss via eventually getting a claim on your other assets?

[ediev]

I do not know what motivates them - maybe they want some attention from me because I have not given them any?

Yes I'm in FL - a recourste state. They can come after me for the deficiency. However, I have nothing to come after - and a BK will take care of that.

Baffling

[dm415]

Maybe the 2nd is an insured loan(PMI).You may not even know it.I had a second with boa that was discharged in a 7.I later got a letter from an insurance company stating they payed the loan balance in full and boa then set me a letter showing the loan paid in full.Of course nobody came after me because of the discharge.Point is that they have to foreclose to get paid by insurance.

[ediev]

Maybe the 2nd is an insured loan(PMI).You may not even know it.I had a second with boa that was discharged in a 7.I later got a letter from an insurance company stating they payed the loan balance in full and boa then set me a letter showing the loan paid in full.Of course nobody came after me because of the discharge.Point is that they have to foreclose to get paid by insurance.

Now this explains a lot! It does make 100% sense. Especially since they never closed our credit line despite the fact the r/e market in our area (everywhere really) was declining rapidly...and many people we knew had their lines closed...and even a banker friend told us - better take the money while you can - they will close it! But they did not close it until practically a year after it had become totally unsecured and that was prompted by months of us not paying. Suspicious if you ask me! Now, the question is, how could I possibly find out if they have insured the loan? I think this would be important to know in order to have a better idea of their motives and how it would affect the whole timeline...anyone have an idea how i could find this out?