Second Mortgage Foreclosing But Not The First?

Comments(8)

• 
  JohnMerchant8th January, 2004

  What possible effect could foreclosure of 2d lien have on the 1st? NONE
  
  Any buyer of the 2d, or buyer of the RE at the foreclosure auction is going to take the RE subject to that 1st, and is going to have to pay it or lose the RE to that 1st lien holder.
  
  But why not approach the 1st lien holder to see if they'd short sell their 1st...you won't know until you ask, will you?

• 
  InActive_Account8th January, 2004

  Generally, the 1st Mtg holder is in great shape. The second is foreclosing so the property goes to a stronger (couldn't be worse) individual who is still obligated for the debt owed to the 1st mtg holder.
  
  Some times the 2nd mtgee buys out the 1st mtgee when they foreclose. Other times, they just want their debt satisfied and they leave the 1st mtg in place.
  
  Unless the property has been trashed , the neighborhood has had an adverse effect on the property, or the property has been drastically over-encumbered the 1st mtgee just sits back and smiles. After all, the successful bidder of the property has a financial interest to see that the 1st mtgee gets paid ---else she suffer the same fate as the original defaultee..

• 
  InActive_Account8th January, 2004

  Yuor best bet is to approach the 1st to inquire about a short sale.....You never know.

• 
  edmeyer8th January, 2004

  I would feel reasonably safe if I were to bet against a short sale on the 1st unless the value of the property has fallen off a cliff since the second was put on.
  
  Even if the first is in default , the successful bidder at a sale will surely cure the default and the first note holder becomes whole with a new and presumably more responsible payor.
  
  Just my meandering thoughts.
  
  -Ed

• 
  the_acrobat9th January, 2004

  Thanks to everyone for the clarifying replies. Most helpful.
  
  I think the short sale phone call to the 1st position lienholder is the ticket,
  but I may also call the attorneys representing the foreclosing, 2nd position mortgagee, to try to get additional context on the situation, although typically those cats are extremely careful (read paranoid) about what information they give out (and perhaps rightly so, since this country is so sue-happy).
  
  keep on keeping on
  -presley

• 
  TheShortSalePro9th January, 2004

  No real info was disclosed with regard to value, so speculating on whether or not the first or even the second might short is premature.
  
  Everything is predicated upon the perception of value.

• 
  Tedjr9th January, 2004

  I would not even try to short the first. Do you have contact with the owner to even put together a package? Odds are the 1st sees equity and will not take less especially if the 2nd will pay off or cure the default. You may be able to buy the 2nd cheap but without values and balances one may only speculate.
  
  Good LUCK and Thank You
  Hope this helps some
  Ted Jr

• 
  LynLinz9th January, 2004

  Can somone make it more clear?
  Maybe it's too early for me but I am puzzled
  In this situation we are saying that the first lien holder will accept the new buyer "subject to" but NOT in a different situation where the seller signs over his property "subject to"
  {I guess the 1st lien holder has no choice with the foreclosure of the 2nd, right?]