Multiple mortgages, 1st, 2nd, 3rd

[Wantmypeace]

If you miss the payments on the 2nd or 3rd, can they force the foreclosure? I'm considering ch7 and not reaffirming, and then walking away, but I'm not sure how this works with multiple mortgages on an underwater property. If we were to stop paying the 3rd (which has NO equity), could they force the foreclosure if the 1st and 2nd are current? What about the 2nd which has some equity? We owe 145, 175, and 45, respectively, and the house is worth 215K. Three years ago, it appraised at 415K.

[Pandora]

Your 1st is 145 your 2nd is 175 and your 3rd is 45 ... is this correct?

If so - chances are extremely high that your 2nd will foreclose before the 1st given you owe more to them. However because they are the 2nd lien holder - they'd have to pay off the 1st, then anything else goes to them. If anything is left, they'd have to pay the 3rd something.

Any lien holder (mortgage) has the right to foreclose over any other (1st 2nd 3rd, etc) - its just a matter of $$ and how badly they want the property and time vested into it.

ETA: what did you pay for the house originally? If its valued currently at 215K and you owe 145K on the 1st - that leaves roughly 70K towards the 2nd / 3rd mortgages.

[Wantmypeace]

I paid 113K for the house originally, but we refinanced it up to 145K, and then added the second to do a major remodel, and then added the 3rd to add a pool. Yah, I know, very stupid. Anyway, so, GMC has the 2nd, and they'd have to foreclose and get 185 (if they could get the current value), and then pay 145 to the 1st, and they'd net 40K. Would they bother for so little? I'd expect Wells Fargo to do it for the 145 we owe them and GMAC and GreenTree would be left in the cold (or with VERY little). What do you think?

[justbroke]

Yes, they'd bother for so little. They don't want a depreciating asset (meaning the longer they wait, the more they lose). Additionally, they may actually have an insured loan, which most people don't realize. They may actually get paid the entire amount based on what type of mortgage insurance that they -- the lender -- has!