Foreclosure in Scottsdale>Question Details

Tony varga, Home Seller in 27959

My house is in foreclosure and the 2nd mortgage is in first place lien. Do I stop paying on the 2nd mortgage?

Asked by Tony varga, 27959 Tue Sep 24, 2013

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If you have equity then you are going to get foreclosed on by either the first or the second. If there is no equity sometimes seconds will not foreclose if the first is current, but you will have to get the second caught up and paid eventually. If all you are trying to do is stall the foreclosure so you can live there longer without paying for a while (which is a good option to help some people get back on their feet) then you should contact a real estate agent and talk about listing your home as a "short sale" the process can take months, sometimes years and it keeps you from getting a foreclosure on your credit report.

J.R. Thrasher
http://www.SanDiegoRealEstateVeterans.com
619-929-0105
0 votes Thank Flag Link Thu Sep 26, 2013
You absolutely would benefit from legal advice. Here is one suggestion, however, you may want to seek referrals from several agents:
http://scottsdale-lawyer.com/about/
0 votes Thank Flag Link Wed Sep 25, 2013
Liens are recorded and a date and time stamp issued. In order for the second lien to be in first position the first would have to had record a subordination clause. If there was a title technicality it could be due to "who's on first" or from Robosigning. This is where your attorney and title officer can shed some light for you.

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.
0 votes Thank Flag Link Wed Sep 25, 2013
Thank you for all the responses I had questions on our foreclosure situation and this site was just one site that popped up about foreclosure questions. Thank you again.
0 votes Thank Flag Link Wed Sep 25, 2013
This seems very strange to myself (and apparently to everyone else), how is it that your 2nd lien is listed as the first lien?

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.
Web Reference: http://RobWeber.com
0 votes Thank Flag Link Wed Sep 25, 2013
I'm with Karen ... go back to the attorney, see what they have to say. I have a decent hunch as what to answer may be but, as I'm not attorney and not in full possession of all the details, they'd be a far better source for the answer than I or anyone else here would be.

Gotta say, I'm curious what that "technicality" was in the title insurance. But that's more for curiosity.
0 votes Thank Flag Link Wed Sep 25, 2013
I cannot advise you as to whether or not you should or shouldn't stop making payments. I have worked with an attorney group that handles these types of questions and it might be helpful for you to talk with them. Are you considering selling your home?
0 votes Thank Flag Link Tue Sep 24, 2013
Go back to the attorney from whom you originally sought counsel and ask him/her what you should do. You are asking real estate agents whether or not you should stop making payments. We are NOT qualified to answer your question, and likewise cannot predict the consequences of your actions or inactions.
0 votes Thank Flag Link Tue Sep 24, 2013
Here is more info. Our home lost 1/3 value and was under water about $90k. After 4 years of trying to sell the home we tried a short sale. Wells Fargo ( mortgage bank). declined the short sale at the last minuet because they said there was a technicality by the title insurer. My attorney said that my second mortgage was actually listed as first on the lien. At this point we had no option but to walk away from the house. We were fine with this. We were advised to stop paying the mortgage last nov 2012. We left the property dec 2012. But I have been paying on the second mortgage ever since. Several people have told me to stop paying the second mortgage in this situation. In fact they said the home won't foreclose because as long as I'm am paying the mortgage in first place lien the foreclosure can't actually begin. We have been waiting for Wells Fargo to foreclose but the date has been pushed back now 3 times. What should we do? Please ask more questions if this is not enough info. Thank you very much for all responses
0 votes Thank Flag Link Tue Sep 24, 2013
Hi Tony....the best thing you can do for yourself and for your family is to talk to a CPA and to an Attorney....I will be happy to refer of one if you don't know of one ....with their advice them you can proceed to what is best for you and your family as you have options.

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 Petersen®, North Valley Branch Manager
Accredited Buyer's Representative
ABR,CDPE,SFR,CNE
Your REALTY Office
8426 E Shea Blvd.
Scottsdale, AZ 85260
0 votes Thank Flag Link Tue Sep 24, 2013
Please clarify the status of your 1st lien situation. Also, are you underwater on the house? Short sale could be an alternative to foreclosure. I have successfully done over 50 of them.

Cheryl Lennon
RE/MAX Fine Properties
cherylmlennon@remax.net
602-999-8858
0 votes Thank Flag Link Tue Sep 24, 2013
Hello Tony. Please add some clarification...when you say that your '2nd mortgage is in first place lien', do you mean that your primary (1st lien) mortgage is paid-off?

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!

Jim Mitchell
Realty ONE Group
Jim@TheAZRealtor.com
PH: 480.231.6769
0 votes Thank Flag Link Tue Sep 24, 2013
Have you considered doing a short sale? My team specializes in negotiating short sales for homeowners.
0 votes Thank Flag Link Tue Sep 24, 2013
Good questions that deserve a greater perspective before giving you nay kind of answer.

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.
0 votes Thank Flag Link Tue Sep 24, 2013
Hey, Tony ... help me with this one. You've got two mortgages. Which one is foreclosing, the first or the second? And are you saying the second lien somehow is in first position?

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.
0 votes Thank Flag Link Tue Sep 24, 2013
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