Received NOD and Notice of Intent to Foreclose from a 2nd loan(heloc)

[ultimate4799]

Hi Prof Shays,
After barely 60 days behind on my mortgage, my 2nd loan(heloc from SLS $120k) send me NOD and Notice of Intent to Foreclose. Any idea why they did this since I'm only 60days behind? Also this is a refi loan and below is a summary(owner occupied in CA) :

1st loan WFB $640k
2nd loand SLS $120k
house value $499k and still dropping. A bigger and newer house only sold about this price.

original purchase price is $700k

I don't think the 2nd lender will get anything if they foreclose prior the 1st mortgage, right?

Please advise me what you can foresee as the real intent of the 2nd mortgage. I highly appreciate it.

[The Professor]

Let's talk about the document you received. Does it contain the EXACT language contained in California Civil Code Section 2924c?

Specifically:

"IMPORTANT NOTICE (14-point boldface type if printed or in
capital letters if typed)

IF YOUR PROPERTY IS IN FORECLOSURE BECAUSE YOU ARE BEHIND IN YOUR
PAYMENTS, IT MAY BE SOLD WITHOUT ANY COURT ACTION, (14-point boldface
type if printed or in capital letters if typed) and you may have the
legal right to bring your account in good standing by paying all of
your past due payments plus permitted costs and expenses within the
time permitted by law for reinstatement of your account, which is
normally five business days prior to the date set for the sale of
your property. No sale date may be set until three months from the
date this notice of default may be recorded (which date of
recordation appears on this notice).


This amount is ___________________ as of ______________________
(Date)
and will increase until your account becomes current.

While your property is in foreclosure, you still must pay other
obligations (such as insurance and taxes) required by your note and
deed of trust or mortgage. If you fail to make future payments on
the loan, pay taxes on the property, provide insurance on the
property, or pay other obligations as required in the note and deed
of trust or mortgage, the beneficiary or mortgagee may insist that
you do so in order to reinstate your account in good standing. In
addition, the beneficiary or mortgagee may require as a condition to
reinstatement that you provide reliable written evidence that you
paid all senior liens, property taxes, and hazard insurance premiums.

Upon your written request, the beneficiary or mortgagee will give
you a written itemization of the entire amount you must pay. You may
not have to pay the entire unpaid portion of your account, even
though full payment was demanded, but you must pay all amounts in
default at the time payment is made. However, you and your
beneficiary or mortgagee may mutually agree in writing prior to the
time the notice of sale is posted (which may not be earlier than the
end of the three-month period stated above) to, among other things,
(1) provide additional time in which to cure the default by transfer
of the property or otherwise; or (2) establish a schedule of payments
in order to cure your default; or both (1) and (2).
Following the expiration of the time period referred to in the
first paragraph of this notice, unless the obligation being
foreclosed upon or a separate written agreement between you and your
creditor permits a longer period, you have only the legal right to
stop the sale of your property by paying the entire amount demanded
by your creditor.
To find out the amount you must pay, or to arrange for payment to
stop the foreclosure, or if your property is in foreclosure for any
other reason, contact:


______________________________________
(Name of beneficiary or mortgagee)

______________________________________
(Mailing address)

______________________________________
(Telephone)

If you have any questions, you should contact a lawyer or the
governmental agency which may have insured your loan.
Notwithstanding the fact that your property is in foreclosure, you
may offer your property for sale, provided the sale is concluded
prior to the conclusion of the foreclosure.
Remember, YOU MAY LOSE LEGAL RIGHTS IF YOU DO NOT TAKE PROMPT
ACTION. (14-point boldface type if printed or in capital letters if
typed)"

[ultimate4799]

Hi Prof. Shay,
No, it does not have EXACT language as you noted above. The mail is kinda addressed to my attention with a bold title "Notice of Default and Notice of Intent to Foreclose". Also, it mentioned how much total I owe and I have 33 days from today to cure it. Failure to cure it will result in acceleration and commencement of foreclosure.

By the way, there is also a statement saying "if your loan is not brought current, inspections of your property will be made". Do I really need to have them do this even if I'm still living in the house and don't intend to move out until official foreclosure is done?

I really appreciate your advise up to this point. I thought like if my 2nd(SLS) lender accelerate foreclosure, then this will satisfy and shield me from any deficiency judgement in future when 1st lender officially foreclose but I maybe wrong...

[The Professor]

It needs to be "EXACT" in order to be the "real deal." The chances of your second lender following the path of a judicial foreclosure are "slim to none." That would we wonderful but they would be foolish to follow that course of action given the unpaid balance on your first loan is more than the current value of the property.

I assume we have already discussed whether or not your loans are "non-recourse." If not, that is a discussion worth having.

Daniel

[ultimate4799]

Thanks a lot for the advise, Prof Shay. Yes, we did discussed and confirmed already that both my loans are recourse since it was both refi... I'm still evaluating if I will move forward with chapter 7 BK(per the lawyer this is the way to go and he can qualify me) since got CC debt of $43k or just wait and see what happens to 2nd lender(seem they will foreclose first ... But I still have time since I don't need to file chapter7 until go the Notice of Trustee Sale..