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Second Mortgage Foreclosure vs. a First Mortgage Foreclosure
from: Deb St. George - HomelessInKingCounty.comGetting a mortgage is a large step for homeowners. Many make jokes about mortgages and buying their homes calling it "signing their life away". Although it's not quite that serious, taking out a mortgage loan is a huge step. You'll be agreeing to make monthly payments, which include principal and interest, for many years, sometimes up to 30 years. Often by time you've finished paying off your loan, you'll have paid for it two times or more with the interest included.
If the borrower fails to make the scheduled payments on time, they risk losing their home to foreclosure. No one comes out ahead in the foreclosure, not the lender or the borrower. Whether it's a first mortgage foreclosure or a second mortgage foreclosure, it's a big headache for everyone involved. Banks don't like having an REO (Real Estate Owned) on their record and borrowers don't want to lose their home.
In addition to losing their home, they'll have a poor credit rating for many years, which will make it difficult for them to get any credit in the near future. Regardless of whether it's first or second mortgage foreclosure, their credit will be affected the same. You probably understand what a mortgage and mortgage foreclosure is, but many are unfamiliar with second mortgages or second mortgage foreclosure.
An individual buys a home for $100,000 and has a $20,000 down payment. They then take out a mortgage loan for $80,000. We're assuming the home is worth at least $100,000 because banks usually borrow up to 80% of the appraised value of the home. A few years later, the borrower decides to take out a second mortgage. He may be having difficulties making his first mortgage payment and needs cash to be caught up or may also just need extra cash for some expense.
At this time, his home is appraised at $120,000 and his first mortgage loan balance is down to $70,000. He, therefore, has $50,000 of equity to borrow on his home. Following with the 80% rule, he can probably get a second mortgage for up to $40,000. The second lender's name will be on the mortgage under the first mortgage lender because the first has precedence on the loan. Therefore, at this time the borrower owes $70,000 on his first loan and $40,000 on the second loan.
If the borrower cannot make payments on the loans and the loan goes into first mortgage and second mortgage foreclosure, the first lender will get their money before the second. If the home is foreclosed and sold for $100,000, the first lender will get the $70,000 owed to them, with only $30,000 left so the second lender will only get $30,000.
If there is a second mortgage foreclosure but not a first mortgage foreclosure, the second lender may be allowed to make payments to the first lender. Unless it can't be avoided, try to avoid a second mortgage for all concerned.
Mortgage Foreclosure News
NY's Schneiderman sues banks in foreclosure effort - Wall Street Journal
 Los Angeles Times | NY's Schneiderman sues banks in foreclosure effort Wall Street Journal AP ALBANY, NY — New York's attorney general on Friday accused some of the nation's largest banks of deceit and fraud in using an electronic mortgage registry that he said puts homeowners at a disadvantage in foreclosures while saving banks over $2 ... New York Sues 3 Big Banks Over Mortgage Database JPMorgan, BofA Sued by New York Over Use of Mortgage Database New York sues 3 big banks over use of mortgage registry database |
Homes, Not Tents, For Occupy Bernal: Feisty San Francisco Neighborhood Fights ... - Huffington Post
 CBS Local | Homes, Not Tents, For Occupy Bernal: Feisty San Francisco Neighborhood Fights ... Huffington Post At the meeting, Occupy Bernal demanded that Wells Fargo declare a moratorium on all evictions and foreclosures from predatory or for-profit Wells Fargo mortgage loans and negotiate a fair deal for every stressed home owner and renter in San Francisco. NY Attorney General Slaps Fresh Mortgage Lawsuits On BofA, JPMorgan, Wells Fargo City may pull accounts from Wells Fargo for foreclosure abuses 'Occupy LA' Calls For Bank Moratorium On 'All Foreclosures', Will Meet With ... |
Seven Questions Begging to Be Answered Before a Foreclosure Settlement Is Reached - Huffington Post
 Daily News Corner | Seven Questions Begging to Be Answered Before a Foreclosure Settlement Is Reached Huffington Post Tomorrow is the deadline for state attorneys general to sign on to a joint federal and multi-state $25 billion settlement of the robo-mortgage scandal. The settlement will involve Ally Financial Inc. (formerly GMAC), Bank of America Corp., ... Exclusive: Mortgage deal would give states enforcement clout Enforcement Process for Foreclosure Fraud Settlement Outlined Mortgage-Servicing Deal Would Give States Enforcement Power -Reuters |
California's Solo Mortgage Probe Complicated by 2008 Deal - BusinessWeek
California's Solo Mortgage Probe Complicated by 2008 Deal BusinessWeek At the same time, she may be locked into her predecessor's 2008 settlement with the largest lender in the state during the mortgage boom that does exactly that. Facing a Feb. 6 deadline to join a proposed multistate agreement over foreclosure practices ... |
Finally, a foreclosure settlement (Maybe) - CNN
 The Daily Tar Heel | Finally, a foreclosure settlement (Maybe) CNN By Jennifer Liberto @CNNMoney February 3, 2012: 5:19 AM ET Housing Secretary Shaun Donovan is one of the participants in the foreclosure settlement talks that are expected to produce a mortgage settlement soon. WASHINGTON (CNNMoney.com) -- States have ... Donovan says mortgage settlement days away Mortgage-servicing settlement to be done in 'days' |
On Foreclosures, Uncle Sam Courts Investors - Wall Street Journal (blog)
 Daily Mail | On Foreclosures, Uncle Sam Courts Investors Wall Street Journal (blog) By Alan Zibel On Wednesday, a US housing regulator invited investors to submit initial applications to bid on pools of foreclosed properties owned by Fannie Mae, the government-controlled mortgage finance company, as part of a new pilot program. Attorney General Martha Coakley tells Fannie Mae and Freddie Mac to reduce ... Romney super PAC supporter has ties to Freddie and Fannie Obama's Refinancing Swindle |
DeLauro Urges Mortgage, Foreclosure Rules - LoanSafe
DeLauro Urges Mortgage, Foreclosure Rules LoanSafe Rosa DeLauro, D-3, urged support Monday for a bill she has introduced that she says would standardize mortgage servicing and foreclosures. DeLauro's bill mirrors a multistate settlement to be announced as soon as next week that will require one point ... Homeowners in limbo as mortgages go unpaid, foreclosures drag on DeLauro proposes bill to protect homeowners, reform foreclosure process |