Foreclosure in 85382>Question Details

Robert Gosney, Other/Just Looking in Peoria, AZ

During a foreclosure in Arizona, what can a bank due to the borrower who has taken a second mortgage out?

Asked by Robert Gosney, Peoria, AZ Fri Mar 21, 2008

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This is something that you need t discuss with legal council.
0 votes Thank Flag Link Tue Jan 28, 2014
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Best of luck
0 votes Thank Flag Link Thu Sep 15, 2011
There are several variables that you left out. Typically, if a borrower has a first and second mortgage, which ever loan is in default, that lender has the right to foreclose. If a 1st position lender forecloses, and there is second in place, depending on the amount owed to the first and what the market value is, the second may let the first foreclose and protect their interest by bidding at trustee sale up to the amount that they are owed.

If the first loan is in good standing, but the second is behind and in default, the second lender has the right to foreclose regardless of the market value. No matter which lien forecloses, if the loan is not reinstated, a borrower will lose their property to the bank or third party at trustee sale.

If you are in foreclosure, please consult with not only a real estate attorney, but also consult your tax accountant.
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0 votes Thank Flag Link Fri Mar 21, 2008
Not to contradict Donald too much here, but this depends on the type of 2nd mortgage. Many HELOCs are written as personal credit lines, while a true 2nd mortgage is written against the equity of the home. Consult the details of what is truly securing that 2nd mortgage to begin to understand what the bank can do to the borrower of that 2nd mortgage.

As you can imagine, for a great number of reasons, I'm not a fan of HELOCs. It's only too bad that so many home owners used them like a credit card during the boom cycle.
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0 votes Thank Flag Link Fri Mar 21, 2008
Simple answer: Consult your LEGAL COUNCIL - No agent or REALTOR should be answering this question.
0 votes Thank Flag Link Fri Mar 21, 2008
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