Stopping A Second Mortgage Foreclosure
Foreclosure generally happens only to first mortgages as it is normally the first mortgage company that initiates the process
. In rare cases, the
second mortgage company may exercise the option of filing their own foreclosure to protect their interest in the property. In the event of foreclosure, usually only the first mortgage may get paid off through the proceeds of the sale. In many cases, the proceeds of the sale of the home may not even be enough to cover the principal amount of the first mortgage so the chances of other mortgage companies to get their money back may be slim to none. This is why many
second mortgage companies may prefer to try to work with the debtor to find a solution because they mostly might not get anything from the proceeds of the foreclosure sale.
It is required by law that when your first mortgage provider initiates foreclosure, they must notify anyone and everyone with a legal interest in your property including your second provider. Your second mortgage company may use the equity in your home, if any, to bring your first mortgage current and stop the foreclosure. After all nobody really likes
mortgage foreclosure and that includes second mortgage providers as well. However if your home is worth less than what is owed, they might simply do nothing and allow your first mortgage company to conduct all necessary foreclosure procedures.
There are many ways for you to stop the foreclosure of your second mortgage but they involve quite a bit of effort on your part. The first thing you might need to do is to call your mortgage provider if you have missed the due payments of your mortgage for more than 60 days and explain your particular financial situation to them. They may be more likely to accommodate you and work out a new repayment plan based on what you can afford. They might prefer to lose just a portion of their money by the reducing the amount of your loan rather than having to lose all of their money if your first mortgage company might decide to foreclose. You may even opt for a loan modification if your second mortgage company approves it.
If you do not get any response from your mortgage providers within two weeks time you might want to call them up again and remind them of the urgency of your particular situation. You may also opt for a short sale, if all else fails, to enable you to pay for your second home loan. If your lenders do not see any way that they may be able to help you with, you may ask them if they would agree to a short sale of your property. This may only work if your first mortgage provider has yet to foreclose on the very same property. If you receive a notice of default you might want to start talking to a bankruptcy attorney to discuss the option of filing for bankruptcy.
You might want to bear in mind that even if your second mortgage provider is the one who initiated the process of foreclosure, the order of how the liens are paid off through the foreclosure sale may not really change. So it may not matter which mortgage company initiates the foreclosure, the process may move through the system the same way.
Your second mortgage company might do all within their power to
stop foreclosure because they stand to gain nothing should your first mortgage company decides to foreclose. Therefore it may not hurt for you to meet up with your mortgage providers to discuss other options or alternatives to avoid having to foreclose.
by: Ask Bill
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