I carry the 2nd on a house that the lst may forclose on. does the first mortage holder have to pay me off to?

Asked by Vicki Stone, Camino, CA Sun Jul 13, 2008

release the lein

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Ron’s answer
Ron, , Philadelphia, PA
Thu Nov 6, 2008
Usually Tax liens get paid first, then 1st mortgage,2nd mortgage, then other liens, and if any left over it goes to the home owner. But only a real estate attorney in your state can give you an accurate answer. Don't rely on friends.
0 votes
Carrie, Both Buyer And Seller, Say Cheese!
Fri Jul 18, 2008
Property Hookup,

Please give a basic outline of your position here, so we can all learn something. A private discussion is OK, too, but this forum is here for us all to learn more.

Thanks.
0 votes
Sj209, Both Buyer And Seller, California
Thu Jul 17, 2008
The other posters are correct. The general answer is no.
0 votes
Shel-lee Dav…, Agent, Rolling Hills Estates, CA
Sun Jul 13, 2008
Vicki:

In the State of California, it is my understanding that a foreclosure by a senior lien (ie the 1st TD foreclosing) effectively wipes out all junoir liens (ie 2nd TD and / or judgement liens.) This is my experience from four years working in the pre-foreclosure industry. I suggest you verify this with your attorney.

The only time I have seen the 2nd TD get 'a little something' from the 1st TD holder is in a short sale. This type of sale happens pre-foreclosure (i.e. before the actual Trustee sale or auction) and must be agreed to by all lienholders. In this case I am seeing the 1st TD holder offering about 2% to the junior lien holders.

If neither of these scenarios sounds good to you, then you can always cure the default on the 1st and initiate foreclosure proceedings on your loan. Of course, it does not make sense to do this unless there is sufficient value in the property to pay the 1st in full and have something left over for you. With the market decline we have seen over the past 2 years, often the current fair market value of the home is not sufficient to pay the 1st TD in full. In such a case, you might find yourself throwing good money after bad.

I would definitely speak with an attorney, possibly order out an appraisal and then make an informed decision on how to proceed. I hope you that you can at least realize some return on your investment.

Shel-lee Davis
Real Estate Consultant
RE/MAX Palos Verdes Realty
0 votes
Grace Keng, Agent, Santa Clara, CA
Sun Jul 13, 2008
Vicki Stone,

The #2 is after #1, Right?
Same as the 2nd loan comes ager the 1st loan. After a home is sold due to the foreclosure, the 1st will be paid 1st. The 2nd could be wiped all or only got paid a few thousands dollars.

Grace
0 votes
Maria Morton, Agent, Kansas City, MO
Sun Jul 13, 2008
The 2nd does not have to be paid at all in most circumstances. Most of the time, the company holding the 1st mortgage does try to give the 2nd something but it is generally not very much. Basically, you need to be grateful if they give you anything when you both know they don't have to give you anything.
0 votes
Dallas Texas, Agent, Dallas, TN
Sun Jul 13, 2008
Your statement is not clear for an answer. Perhaps reword your question
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0 votes
Carrie, Both Buyer And Seller, Say Cheese!
Sun Jul 13, 2008
You'd be better of if you foreclose first. Check with an attorney.
0 votes
Sylvia Barry,…, Agent, Marin, CA
Sun Jul 13, 2008
Yes, the 1st and 2nd usually try to negotiate.

But from what I have heard, you might not get a lot. I have heard 80/20 cases where the 2nd is getting $1,000 or $5,000 for a couple hundred thousand dollars of deficiency.

If the deal does not go through and the house is foreclosed by the first, they don't have to pay you anything, from what I understand. I think that's why they think a few thousand is very generous (I understand it's not, but they are doing it that way)

Sylvia
0 votes
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