What happens to other leins when foreclosure occurs?
Nov 12, 2008 in
Financial and Loan Tips
Wondering
My house in California is currently in foreclosure. I have a 1st and a 2nd mortgage as well as a 3rd, seller note. What happens at the foreclosure auction? What happens if there isn’t enough funds to pay off the leins? What if any steps should I take?
My house in California is currently in foreclosure. I have a 1st and a 2nd mortgage as well as a 3rd, seller note. What happens at the foreclosure auction? What happens if there isn’t enough funds to pay off the leins? What if any steps should I take?
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5 comments
dragonkraut on November 12, 2008 at 6:58 pm
If there aren’t enough funds at the sale to cover the total amount of the debt you owe, the bank takes a loss and transfers that to you via your credit taking a big hit and you owing the balance. You’ll have to discuss your options with the mortgage holders.
goz1111 on November 14, 2008 at 8:47 am
when the first note forecloses on the property all other liens/notes that came after which are called junior compared to the first note called the senior, are wipe out
depending on the second note, if it was recourse they can come after you, also the third can come after you as well
Howard S on November 17, 2008 at 5:31 pm
They can try to collect.Any recommendations should come from professionals, not a forum like this. Its serious and its complex.
Try talking to a bankruptcy expert and see if you have any options regarding protecting the assets you have left.
Here is a u tube page with quite a few videos about your circumstance. Listen to a few of these to gain an education and THEN please talk to a qualified professional. The internet, however well intentioned, is full of mis information
You tube;
Jennifer on November 19, 2008 at 1:27 pm
Hi,
I used “Credit Solution” to settle my debt and avoid foreclosure.They managed to reduce my debt up to 58%.It’s legitimate.I came across this company on NBC News Special Edition.Check it out here:
borrowerhotline.com on November 21, 2008 at 9:58 pm
The beneficiary who is subordinate to other senior liens will lose their interest in the collateral if the home goes to sale by the 1st lien holder. NOW GET THIS!
An REO investor (vulture buyer as they call them) will often pick up the subordinate lien for pennies on the dollar and then bring the senior lien current. That’s right, these 2nd’s are going for nothing under a negotiated settlement (can’t say how much but trust me I see it every day)! Now, investors will bring the 1st current in order to take over the foreclosure and take your home with a loan in place! (no acceleration clause here Charlie!).
But you can do the same its good to be King!.
As a friend of mine who is with the law firm of “Dewey Screw’m & Cheat’m” told me. “You the owner need to find a third party to this for you; negotiation with the 2nd where they will otherwise be forced out in foreclosure. (Careful for transparency and need for some disclosure here) But offer the sub-lien holders as little as possible and tell them to “Take a hike”. It’s sad but true, combo financing to 100% is now viewed as highly predatory and it potentially is going to become a ghost! We in the industry call it equity skimming. Yo! Put down the biscuits and mustard and pencil this out! – It’s your best alternative to losing your home!