Foreclosure in Worcester>Question Details

Worcesterrea…, Other/Just Looking in Worcester, MA

what happens when the 1st mortgage holder neglects to notify 2nd mortgage holder their intent to foreclose, then foreclose?

Asked by Worcesterrealtor, Worcester, MA Sun Mar 25, 2012

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That is a question for an attorney.

If I had to guess, absolutely nothing. I don't believe they have an obligation to a subsequent lien holder on the property. The agreement is between the first lien holder and the home owner. The 2nd lien holder voluntarily accepts a second position.
0 votes Thank Flag Link Mon Mar 26, 2012
The seller should talk to his attorney and/or tax accountant. Legally, I believe, the home owner is still liable for the debt. The second may charge-off the debt. However, they may have the right to sell the note to a third party who will try to collect the debt. If they charge-off the debt, the IRS may consider this as income to home-owner. So it is not as simple as saying that the second gets nothing. In a short sale, a good negotiator will negotiate the deficiency judgements.
0 votes Thank Flag Link Sun Mar 25, 2012
Are you paying the 2nd and not the 1st? The 2nd is a lien on the property and any proceeds above the 1st will go to the 2nd and so on. Tax liens take precedent over the other liens. If the 2nd did not bid at the auction it is because the value of your property is below the value its into it for and they don't want to loose more money.
0 votes Thank Flag Link Sun Mar 25, 2012
Hi Worcesterrealtor,

The second frequently has little to say in the matter of a foreclosure from the first and often gets nothing in either a short sale or a foreclosure. So to answer your question - not much - it's still foreclosed.

Does that help?

0 votes Thank Flag Link Sun Mar 25, 2012
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