Question about 2nd loan recourse

[torwyn44]

Greetings,

Does anyone know if a lendor who is in second position can foreclose if we default on the second, but choose to continue to pay the 1st? We are in California, so we understand there is no recourse but foreclosure, but wonder if the second lendor can still foreclose.

If they can, how would they do it? Would they have to work something out with the lendor in 1st position?

Thanks

Joe

[ORNV3]

Hi Joe,
I'm no expert... but I've been looking into this lately because I'm in the same situation and I'm trying to figure out what to do. I just missed my first second mortgage payment in January. Here's what I've found.

It looks like the second lender can foreclose if they choose. The thing is..... if your house has lost so much value that it is worth less than what you owe on the first then the second probably won't because all the money from the foreclosure goes to the first mortgage.

For example: The total loan is for $300000
The first is for $250000
The second is for $50000

Say the house is now valued at $200000. As far as I can tell, the second won't start a foreclosure because they won't get a dime.

If they will see some money then they probably will foreclose.

Again, I'm not an expert but I hope that might help you.

[vavouna]

I'm in the same situation too. Hopefully someone will answer with more information on this. I was told the same thing ORNV3, that they probably won't forclose because the first would have to be paid off and with the market the way it is, the second would not get nothing.

[Ambling]

I spoke with an attorney about this who said the 2nd would be insane to foreclose if they won't get any money back. Furthermore, they are required to come after the property first which means they have no other option but to foreclose.

They might send it to collections but they won't foreclose.

[torwyn44]

I know it is not possible to predict what they might do next... but, any idea what they will do after being unsuccessful in collections? We would like to settle, but collections is not interested in hearing that...

[The Professor]

Without additional information it is impossible to provide a reasonable answer to your question. Please provide answers to the following:

1. In what state is the property located?
2. What is your estimate of the fair market value of the property?
3. For each lender, provide its identity, the current amount owed, and whether the loan was created at the time your purchased the property and its entire loan proceeds used to buy the property.
4. Did you occupy the property as your primary residence at the time you purchased it?

Daniel

[torwyn44]

Hey Daniel,

1. In what state is the property located?
A: California

2. What is your estimate of the fair market value of the property?
A: $275,000

3. For each lender, provide its identity, the current amount owed, and whether the loan was created at the time your purchased the property and its entire loan proceeds used to buy the property.
A: 1st - ING $408,000. 2nd - National City $102,000. Both loans were used to puchase the house.

4. Did you occupy the property as your primary residence at the time you purchased it?
A: Yes

Interesting thing happened today. I decided to answer my cell phone today knowing National City was calling. This guy was really harsh, and rude. Why I told them I planned on letting the house go... the guy asked me if I planned on filing Bankruptcy
, and they will take me to court, and I can be sued for what I owe, etc. I told them that there is no recourse in Calif, but they told me that didn't matter and I could still be made accountable for the debt.

Thanks

[Ambling]

Scare tactics. Or stupidity.

Either way... non-recourse is not hard to figure out.