Let Me See If I Understand Foreclosure...
Here's some things I am confused on. If a person has a home and you find them. And this home has a 90K 1st which is up to date and a 20k 2nd which is 6 payments behind...
The 2nd can foreclose? So what happens if the 2nd forecloses? Does the house go to auction?
Let's say the house is worth 90K and is overfinanced, how could an investor step in a make money?
Thanks,
Solutions Kid
On 2003-09-02 22:10, SolutionsKid wrote:
Here's some things I am confused on.
Hold on, I will try to answer you, however, I would be willing to take my drubbins from any other senior investor.
If a person has a home and you find them....apparently you did.
And this home has a 90K 1st which is up to date and a 20k 2nd which is 6 payments behind...this person has made the mistake of taking out a 2nd mortgage, so he's been able to take care of the first, becuase that what his budget affords, the reason that he can't take care of the 2nd is because he could never afford it in the first place!
The 2nd can foreclose? Yep. So what happens if the 2nd forecloses? The 2nd goes through the entire trust_deed/mortgage foreclosure process, and the lender holding the first is notified.
I know I am going to go against the grain, and I don't mean to dash your hopes, but I sincerely believe that if you had a conscience, and I don't see any reason why you would be lacking one, tell the guy to contact the first lender and get the house refinanced.
He keeps his house, you get to be a hero, and maybe, just maybe, this character can direct you to one of his co-workers who is very dire need...
Does the house go to auction? The house goes to auction with the 1st probably making the bid to save his mortgage. Otherwise, I believe, the 2nd ends up taking on the debt from the first. Once again, I am willing to be reprimanded from a senior member if I have steered this chap wrong.
Let's say the house is worth 90K and is overfinanced, how could an investor step in a make money?Since I am very new to this, I will leave this question with someone who could truly answer it.
Thanks,
you're welcome; SolutionKid
mwatrous
[/quote]
Truthfully I am posting a hypothetical question to learn more.
Just curious to what happens when 2nd forecloses and what happens to 1st, etc and how an investor can step in and help out someone in this situation...because i know I have read about people doing something like this, just can't remember.
How's that for ambiguous?
[addsig]
An investor would be able to make money by short selling the 2nd mortgage. Being that the 2nd mortgage (even if they bought the house at the auction for 110k) they would be upside down. If you offered them 5k, they might bite. Something is better than nothing...
If the value of the house isn't there, I don't think that a non-hard money lender would refinance. The lates for the 2nd have probably shown up on the owner's credit report and thus it would have to be a equity loan. Being that he doesn't have much equity, he might not have that many options...
good luck
The foreclosure of the second mortgage will not jeopardize or place at risk the first mortgage.
If the second initiates foreclosure proceedings, typically the first mortgagee is notified and said notification will trigger a foreclosure reaction by the first.
If the second's foreclosure results in a forced public sale, whoever might be the successful bidder would own the house subject to the first mortgage.
If the first mortgagee's foreclosure results in a Sheriff's Sale, Trustee's sale, or other forced taking... any subordinate interests (including those of the new owners) are extinguishable.
If the house is over financed, no one will bid on it at the Foreclosure Sale and it will go back to the lender.
How do you make money?
The house becomes an REO. At that point, you can contact the lender and ask if they are willing to sell their property. They may direct you to the Real Estate agent that they use for their REOs.
Hope This Helps,
Mrs. Meltzer