Posts Tagged ‘lien priority’

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?



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.



A condominium has gone into foreclosure the lending company has it back.

September 3rd, 2009 by Jarad

Question: A condominium has gone into foreclosure the lending company has it back. The condominium has a lien on
it the lien was filed against the original owner.
The owner is about to file bankruptcy. Does the lien
stay with the condominium? Can the association still
collect when the property is sold?

Answer: – The foreclosure auction will wipe out any junior liens that are attached to the property if they don’t protect their position. If a judgment or lien was filed against the homeowner, then it will stay with him unless he files bankruptcy, in which in most cases, liens and judgments are wiped out. So no, the association wouldn’t be able to collect. The only liens that don’t get wiped out are the property taxes and IRS tax liens. Those get paid first when the property is taken back by the bank.



Liens on the home, (other than property tax or Federal) am I obligated to pay that lien?

May 7th, 2009 by Jarad

Question: If I buy a home at a foreclosure sale, and later determine there is another lien on the home, (other than property tax or Federal) am I obligated to pay that lien to obtain clear title?

Answer: – Yes, if the lien has seniority, you are responsible as the high bidder to pay off all liens to clear title. That’s why it’s so important to run a title report to make sure there are no liens on the property and to find out how many liens are on the property. I’ve heard of cases where individuals will bid on properties thinking they are a great deal and find out later it was the 2nd mortgage they were bidding on and they have to now payoff the first. Most lose their deposit and it goes back up for auction because they thought the opening bid was for the 1st mortgage. Hope that helps.



What does a lender in first position have to be concerned with regarding 2nd lien holders?

February 15th, 2009 by Jarad

Question: What does a lender in first position have to be concerned with regarding 2nd lien holders? Why would they not want to negotiate with the Owner until the 2nd line holder goes away?




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