Foreclosure in 91792>Question Details

Acal, Renter in 91792

when a house has been foreclosed, what happens with the 2nd mortgage? Will they get paid a % when the bank sells the property?

Asked by Acal, 91792 Sat Feb 4, 2012

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If the house sells at trustee auction to an investor and the investor pays above the 1st lien amount the 2nd will get some money. If no investor buys the house and it goes back to the 1st lender as an REO the 2nd lender will get nothing.
0 votes Thank Flag Link Mon Feb 13, 2012
Emily is right. 2nd lien GETS ELIMINATED, it becomes history. NOw, the liability to the seller remains, depending on the type of loan and state of jurisdiction!

REgarding if they get any % of the sale, they get nothing. NADA, "0". Although they should at least get a "thank you" letter!

:)
0 votes Thank Flag Link Mon Feb 13, 2012
Emily did a good job of answering this from the point of view of the Homeowner.
From the point of view of the new Buyer, you don't have to worry about this;
Once a property has gone through the Foreclosure process, it should be scrubbed clean;
in fact, the Title Company will make sure of it.
They will issue a Title Insurance Policy that guarantees that all Liens have been lifted and you will have clear Title.

Good luck and may God bless
0 votes Thank Flag Link Sun Feb 5, 2012
When a home is foreclosed (Mr. Smith is not on title anymore), the 2nd lien holder is toast, wiped out.... BUT if Mr. Smith had a 2nd lien that was NOT a purchase money loan, Mr. Big Bad Bank can pursue Mr. Smith for a deficiency judgment.

If Mr. Smith took out a $100K equity loan & went to Vegas & blew it all on Red or went out & bought a boat, Mr. Smith, after a foreclosure can likely expect a call from Mr. Big Bad Bank 2nd Lien holder asking him to pay up!

If Mr. Smith is smart, he'll contact an excellent Realtor who's very experienced in handling short sales & will choose this option. If the 1st & 2nd lien holder agree to a short sale, they can't pursue you in the future for a deficiency judgment (you'd get this in writing before closing)

Shoot me an email directly if you want to talk about this some more, I don't look back on this same Trulia thread for answers posted after mine.

EmilyKnell1@yahoo.com
562-430-3053 c
Realtor Since 1996
Main Street Realtors
Short Sale Expert
0 votes Thank Flag Link Sun Feb 5, 2012
Acal, every state is different in their foreclosure process. Again check out your location on Google, contact a reputable Foreclosure-attorney to verify the laws of West Covina, CA 91792. In Pennsylvania secondary liens like 2nd, 3rd mortgages usually receive nothing or a very small amount. As the 1st lien holder is usually taking a loss, so there isn't much or anything left over for junior lien holders.

Again best of luck, and verify all info with reputable/knowledgeable professionals please.

Rob
0 votes Thank Flag Link Sun Feb 5, 2012
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