Usually the first will file foreclosure. However, if the first is threatening to file foreclosure the second may bring the first current to protect their interest and file first. However, if the second foreclosures they are assuming the debt of the first. If the first forecloses the second loses out.
Aside from the obvious confusion about that, you should always seek counsel if you're asking a question that may have legal ramifications. Everyone who answered this post so far has provided some helpful advice but at the end of the day, none of us have a law degree.
Spend the ?$100-200? for a brief consultation with an attorney and proceed from there.
Gotta say, I'm curious what that "technicality" was in the title insurance. But that's more for curiosity.
Feel free to call 602.421.6540 my name is Angelica..... but if not I wish you the best in this chapter of your life....this too will past.
Angelica PetersenÂ®, North Valley Branch Manager
Accredited Buyer's Representative
Your REALTY Office
8426 E Shea Blvd.
Scottsdale, AZ 85260
RE/MAX Fine Properties
The most basic question: are you certain that you're 'under water' on your mortgage(s)?
(IE: you owe more than the home is worth in today's market)
If not, what's the status on the 1st lien?
Are you current on your 1st lien and delinquent on your 2nd?
Also, any ethical real estate agent or attorney should NEVER say to you "stop paying your mortgage". Although financial reasons might dictate otherwise, you have a obligation to repay the debt as noted in your deed/mortgage documents. The decision to stop paying must come from YOU the homeowner, hopefully after a thoughtful discussion with your family, a financial adviser, and/or attorney.
That being said, in the past 3-4 years, I've had a few short-sale listings where the lender (or investor who owns the loan, ie: Fannie Mae, Freddie Mac, etc) has actually TOLD the homeowner that they MUST be at least 2-3 months delinquent before they'll accept a short-sale. At that point, when your lender is basically telling you that you must stop paying in order to sell the home, then ultimately it's up to you to make the decision to stop making the payments.
Keep in mind, there are still plenty of scam artists out there that will tell you to stop paying so they can list your home as a short-sale. Be wary. They typically also are part of an LLC that wants to make a low offer on your home with the intent that they'll 'flip' it eventually for a profit, sometimes a few months down the road.
I've listed and successfully closed some short-sales where the owner was 100% up-to-date on the payments and NOT delinquent. It can be done, but it's up to the investor who owns your loan to accept a short-sale on a current mortgage (one that's NOT delinquent).
Why would a lender accept this?
If they see that you might have an 'impending default' due to some upcoming financial hardship or medical issue, they might allow you to keep your loan current and they'll still agree to the short-sale.
Of course, there are many items besides your hardship that factor into their decision: your current income, the outstanding loan balance, your total debts/liabilities, the value of the home, etc. These are reviewed on a case-by-case basis by the lender(s), so it's not a 'one size fits all' solution.
IF your decision is to eventually list the home as a short-sale (remember you must vacate it upon closing), then that should be done only after every possible avenue to avoid it has been exhausted.
Have you tried a loan modification?
Have you contacted your lender(s) to see if they can work out a restructured payment plan?
Have you spoken to a lender about a HARP refinance?
The ultimate question is what do you want to do with your home? If you want to stay, then try every avenue out there to either modify the loan or get a refinance.
If you want to leave the home, then your choices are a short-sale, let it go to foreclosure (trustee's sale), or approach the bank with a died-in-lieu of foreclosure.
You'll likely have many various responses from agents and lenders here on Trulia. If you have specific questions that you'd like answered, don't hesitate to call or email me any time.
Thanks for the question!
Realty ONE Group
Do you want to have it foreclose or would another option be better?
Have you explored all of your options?
Do you live in this house now?
Lots of questions for you.
My help is free and comes without obligation.
Is this your own residence or an investment property? Are you just letting it go or have you looked at trying a short sale (assuming loan modification, etc.) isn't an option?
Send me an e-mail and let me see what I can figure out for you.