Can a lender in second position foreclose on your house?

[capamando]

Hello,

We are considering coming to an agreement with our first mortgage lender to see if we can continue living in our house. We have been discharged (chapter7) and did not reaffirm neither of the two mortgages. If we were to be successful with our first mortgage lender, could the second mortgage lender in second position force a foreclosure?


Thanks

[despritfreya]

Any lien holder can foreclose if you are not servicing the loan. If the 2nd forecloses it must either pay off or service the 1st which is in a senior position. If the property is upsided own after deducting what is owed to the 1st, the 2nd would be stupid to foreclose. But. . . having "smarts" is not the norm for lenders. It is a risk you take by not dealing with your 2nd, but it is a relatively small risk.

Des.

[capamando]

Any lien holder can foreclose if you are not servicing the loan. If the 2nd forecloses it must either pay off or service the 1st which is in a senior position. If the property is upsided own after deducting what is owed to the 1st, the 2nd would be stupid to foreclose. But. . . having "smarts" is not the norm for lenders. It is a risk you take by not dealing with your 2nd, but it is a relatively small risk.

Des.

Despritreya,

Thanks for your info.... so.... my first is 100k my second is 65k and the market value of the house atm is around 85k. Would the 2nd be willing to negotiate a buy out in order to get rid of the lien? I know it depends on many factors but what is your take on this?

[despritfreya]

my first is 100k my second is 65k and the market value of the house atm is around 85k. Would the 2nd be willing to negotiate a buy out in order to get rid of the lien? I know it depends on many factors but what is your take on this?

Personally I have never had a client pay "blood money" for the release of a 2nd lien so I do not have experience in this area. We all know it makes perfect sense to negotiate a buy out. But, we also all know that lenders don't listen to reason. I beleive there are several threads on this topic.

Des.