Foreclosure University Lien Priority

Can my 2nd mortgage (heloc) foreclose on me?

March 20th, 2012 by Jarad

Question:  I have done a loan modification with my first mortgage and have been making the monthly payments every month with no problems. We have a Home Equity with another back which we have not been making the payments for that for over a year now. That bank is now sending us Notices Of Intent To Accelerate. Can they foreclose on our home even though they are not the first mortgage and we are current with the first mortgage company. what can this bank do to us?

Answer:  – This question comes up all the time. For some reason, many homeowners don’t believe the 2nd mortgage can force the sale of their home. In most cases, your home is collateral for the loan. That’s why when you get a 2nd mortgage, they want to make sure there is equity in the home so they can get paid if they have to foreclose. Even if you are current on your first mortgage, doesn’t matter. The 2nd mortgage can still foreclose and force the sale of your home. Although they would prefer not to because very likely they won’t be able to sell it for what they are into it.

So they will incur both foreclosure costs and lose out if the home is upside down. This is why they are so willing to work with us and other investors in settling those 2nd mortgages because they would prefer to have something rather than nothing. In any case, you will eventually lose your house if you continue on this path so it makes no sense if you are not paying your second, might as well not pay your first either. A better solution if you want to keep paying your first, is to work out something with the 2nd… basically a settlement. You’ll agree to pay them x amount to satisfy the loan.

If the 2nd forecloses, more than likely they will issue you a 1099 or they will file a judgment against you for the difference. When this happens, you can either choose to pay the judgment or the loss that was incurred from the sale or you can file bk. Hope this helps.

Filing for bankruptcy. My second mortgage, now my first?

February 12th, 2012 by Jarad

Question:  I am in the process of filing for bankruptcy. I am filing chapter 13 so I can have my second mortgage, which is a line of credit through Bank of America, dismissed. My attorney just called and said that because my first mortgage was obtained after my HELOC, only because we refinanced, that the court may deem the HELOC as my first mortgage. Is this possible?

Who is liable for paying unpaid property taxes when I buy a foreclosed home from the bank?

November 10th, 2009 by Jarad

Question: Who is liable for paying unpaid property taxes when I buy a foreclosed home from the bank?

Answer: -Typically property taxes are senior to any lien on the home including the mortgage…meaning they have priority over everything. So if you are buying a property at the auction, it’s important to research the property and get a title report so you know if there are any unpaid property taxes because you or the winning bidder will be responsible to pay those off. Now if you buy or purchase a property that is REO or in other words “bank owned” then they will pay any of those unpaid property taxes so they can sell the property with a clear title. Hope that helps.

How long after foreclosure do I have until I have to be out of my house?

October 22nd, 2009 by Jarad

Question: How long after foreclosure do I have until I have to be out of my house?

Answer: -Well it depends on your states laws as to how much time you have until you have to vacate your home. If you live in a trust deed state where the redemption period is before the auction, then you’ll have a few weeks to a month to leave your home. If you live in a state where foreclosure is filed judicially, typically the redemption period is after the auction so again depending on your states laws and redemption period after foreclosure, it could be a few months up to six months.

The best way to find out how long after foreclosure until you have to be out of your home is to call up a title company and ask them or you can visit your State Laws page and see when your redemption period is.

Usually you’ll receive a notice from the bank or the individual who purchased the home at auction. There is a small chance that if an investor picked it up, they may allow you to stay there and rent. I say small chance because they are going to question whether or not you have the means to pay them rent when you weren’t able to pay the bank mortgage. You will have to convince them that you are in a good enough situation where you can pay them a monthly rent or they will evict you.

Either way, you’ll know when you need to be out because you’ll see notices on your door or delivered in person. Until that point, you will want to make arrangements with finding another place to live because chances are high the property will go back to the bank and they will ask you to leave. So don’t sit around and wait for it to happen, I’d start looking now for another place and be ready.

As part of an estate I have a 2nd interest in a mortgage, the 1st mortgagee has now opted to foreclose.

September 15th, 2009 by Jarad

Question: As part of an estate I have a 2nd interest in a mortgage and the 1st mortgagee has now opted to foreclose. Will my interest be paid or do I only get paid if the property sells for more than the first mortgagee is owed?

Answer: -When the property goes to foreclosure, everyone is paid based on lien priority. If you are in 2nd position and the 1st is foreclosing, the opening bid will be the loan amount on the 1st plus a bunch of fees. The only way you’ll get paid is if someone bids more at the auction than the opening bid. Anything above the opening bid will go to whoever is next in priority.

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