If you default on the second mortgage first, the lien holder evaluates if they can mitigage their loss by incurring the cost of foreclosing. If the second forecloses and is the winning bid at foreclosure, they become the owner of the property subject to the first mortgage. The second would have to payoff the first mortgage before they could get and loss mitigation from the selling of the property.

If the first forecloses and the second does nothing, the first will wipe out the second in terms of the property. However, typically the second can file a judgement to try to collect from the borrower.


Good luck!

Keith Manson
First Weber Group
Certified Distress Property Expert
Greenfield,Wisconsin

Lindylu22,

If you default on the first mortgage they will likely begin foreclosure proceedings. After you are 90 days late they can file a notice of default and set an auction date for the home.

If you are current on the first and default on the second they reserve the same right as the first to start the foreclosure process. However if they want to foreclose they would have to buy out the first. Depending on how much your home is worth and how much you owe they may or may not want to do that.

If you have defaulted on the first and they foreclose the second gets wiped out entirely. Both have the right to pursue you for any deficiency amount owed after the sale. For more information on foreclosure law specific to Idaho you can go to http://www.HopeForIdaho.com.