2nd Mortgage Vs. 1st Mortgage
Can a person default on a 2nd mortgage? Someone called me today because they received NOD letter. He's not sure if it's becuase he is behind on the 1st or the 2nd loan. My assumption was that the 1st mortgage is the one that can cause a NOD because it holds the 1st lien on the house....
My wife will meet with seller tomorrow and get more details and default letters. Has anyone been successful getting a 2nd to discount and not foreclose? Is it then still possible to get the 1st to short or is there too much equity here?
Yes. You can default on a 1st, 2nd, 3rd, 4th, 5th, etc. Any lien holder who does not recieve payment may foreclose.
I have encountered a similar situation. A $10,00 2nd is foreclosing ahead of a 50,000 1st. The home is worth $80,000. Any ideas about what can be done in this situation? Initially I thought the first was foreclosing. I was going to offer the 2nd $1000 and buy the home for $52-53,000. Is there anything to gain here by contacting the second?
Hi Kleach,
As Hibby said, a 2nd, 3rd, 4th, (etc) can foreclosure, however they must payoff the loans in front of them.
In the example that you provided, there is a nice equity spread there, providing that your numbers are accurate. A Great solution to that one is to simply pay off both notes, and you'll give yourself $20K in equity.
Best of Success!
BAMZ
Be careful. Most times if she is delinquent on the 2nd she is also delinquent on the 1st. So you deal with the NOD on the 2nd only to be foreclosed on the 1st a couple of months later. Solution: Get the data on both mortgages. Once you get the information. Come back to this website for further instructions.
As with everything else in life the answer is "it depends". If the first is protected, i.e, the as-is FMV of the property exceeds the amount owed on the first, there would be no incentive for the first mortgagee to consider a short sale. In such case, work on the junior lienors (2nd, 3rd, etc).