Home Loans and Support

Can 2nd Mtg holder iniate forclosure?

Discussion in 'Stop Foreclosure and Tell Us Your Story' started by nyreguy, May 24, 2011.

  1. nyreguy

    nyreguy LoanSafe Member

    I have a foreclosure situation in the family where the value of home $50K below 1st mortgage balance. If house sells, no way the 2nd mtg is getting a dime-home values in area have plummeted over past 10 years. Now, i know that 2nd mtg holder CAN bring foreclosure and the 1st has the right to step up and purchase the 2nd loan...but question is will they do it when their own mortgage is underwater?

    The family can start paying 1st mortgage. What if they start paying. Will the 2nd initiate foreclosure? Both liens are serviced by BofA. Thoughts?
  2. TomEason

    TomEason LoanSafe Guide Staff Member

    nyreguy
    Thanks for your post. I recommend you visit this thread, which is all about this subject. www.loansafe.org/forum/debt-settlement/37996-strategy-settling-your-2nd-26.html#post314806
  3. nyreguy

    nyreguy LoanSafe Member

    Great Post Tom! Follow up question on that post with respect to strategy...

    BofA own and services both loans. How should the strategy be different where 1 lender has both liens?
  4. Cat Damiano

    Cat Damiano Mortgage Wars

    nyreguy,


    Are you asking these questions for clients of yours that you are working with? Because the first time you started a thread it was for a close friend and now a new thread for a family member, we prefer that the people that are in these situations try to become members if they are able and tell their story and ask the questions as we offer the information on this site for free.
  5. nyreguy

    nyreguy LoanSafe Member

    "...the first time you started a thread it was for a close friend and now a new thread for a family member..."

    You are following my posts and implying that I am fishing for free advice for clients-which i am not-but regardless i don't see the relevance of you comment. By detailing the situtation, be it for client or a personal one, am i or someone else on this site not contributing to the community? I was under the assumption this is free website for all. If its otherwise, maybe the website should make that more clear. Is there such a rule in place that says you must personally be in foreclosure to post? If there is and you are the admin/moderator, feel free to cancel my account? Sorry...im not trying to be rude but your comments is nonsensical and uncalled for.

    BTW, the person who is the subject of my posts is a close family friend-thus the reference to friend and family. And I am commercial RE investor/owner who has no experience with residential foreclosure so that's the reason i am participating on the forums.
  6. Cat Damiano

    Cat Damiano Mortgage Wars

    Thank you for clarifying as we do get alot of reps from loan modification companies that are charging clients fees to provide their services while getting their information free here when the clients, had they known about this site can simply join and gain the free knowledge and advice to help themselves. So I apologize to you for seeming critical of your questions as that was definately not intended. I am just not a fan of the aforementioned reps that keep trying to join. I do hope that you are able to help your friends out.
  7. SurfwhenUcan

    SurfwhenUcan LoanSafe Member

    Easy NY, Cat was much nicer than I would have been had I made that connection. Part of the role of veterans on this site is to protect impressionable homeowners from those who would try to mine this site for ways to make money off of them. We are very good at sniffing them out and Cat was simply (and politely) informing you that the best course of action would be for the person in question to make inquiries as it just muddies the water having a middle man do it. No need to take it personally. I commend you for looking out for your friend. I've done a lot of that.

    I read your other post, I don't like the chances just reading at face value because the bank will view the other family member as a potential source of assets (translation: a way to squeeze money out of this deal, as much as they can). It also complicates the income and that usually (but not always) leads to questions, followed quickly by "No" - you know how underwriters are. And by extension, no, I think it very unlikely the bank will be agreeable to short selling to the family member either. No harm in asking them, though. I wish they had come to you earlier - these challenges can be overcome but it takes time to develop a solid case that's going to pass scrutiny.
  8. TomEason

    TomEason LoanSafe Guide Staff Member

    nyreguy
    Thanks for your gracious remark and your question. I'm assuming, based on your screen name, that you're in NY. While I don't know about the other states, in CA, there is a concept referred to as the "doctrine of merger", which applies in many cases where the 1st and 2nd loans are with the same lender. Although this is a rather complex question area of law, the merger doctrine is generally supported by a combination of statutory and case law. Bottom line, this doctrine of merger provides additional protection for the borrower in the event the 2nd is a recourse loan and that loan becomes a sold out junior loan. The doctrine states that the borrower is protected against a lawsuit by the SOJL, even where that lender isn't otherwise barred from suing. Please visit these two threads for more info. www.loansafe.org/forum/deed-lieu-foreclosure-do-you-need-help-walk-away/4141-doctrine-merger.html for a discussion of this subject. And here www.loansafe.org/forum/debt-settlement/40758-sold-out-junior-loans.html#post339255 for a thread about SOJ lenders.
  9. stressing

    stressing LoanSafe Member

    Not sure I'm in the correct thread but going to ask my question and hopefully get directed to some answers. I have been reading alot of the different forums and have read the one Tom Eason wrote on Strategy for settling a 2nd. Here's my scenario. We live in Florida, husband unemployed since June 09. In 2009 filed Chapt. 7 and was discharged in March of 10. We did not reaffirm 1st or 2nd mtg. Both are supposedly with BoA. We are current on the 1st and are now 3 payments behind on 2nd. BoA sent the servicing of 2nd to Green Tree in March of 2011. They keep calling and wanting to know what are we going to do - Are we walking? Tell them we would like to keep house but can't afford the 2nd. We tried making an offer to get the lien removed and they wanted all or nothing. We have been trying to determine the value of our home. Ours is hard to do since we do not live in a subdivision and can compare to the house next door. I have looked on Zillow which list the house value at $128,000, BoA at their website showing home value range of 87,000 to 157,000 with an suggested price of $125,00, county has house valued at 107,000. We owe $140,300 on 1st and $83,000 on 2nd. Are these reliable expectations of the true value of a home? Since these vary is the house unwater on 1st and 2nd. We have received a letter from Green tree demanding money that we are in default. I know they have the right to but do you think Green Tree would proceed with forclosing? We would like to settle if possible for a reasonable amount and keep the house but there is no talking with them. They just keep repeating that eveyone is upside down and we are no different when are we going to make a payment. If they decided to forclose about how long would it take as it seems silly to continue to make payments on the 1st if they would forclose. We noticed someone outside the house this past week taking pictures. Trying to figure out what to do or not do. Hope I have put enough information in the post for someone to give words of encourgement or directions we should follow.
  10. Cat Damiano

    Cat Damiano Mortgage Wars

  11. SurfwhenUcan

    SurfwhenUcan LoanSafe Member

    According to Tom, they are in the process of being purchased and that makes me think this isn't a good time to try settling with them.

    Go and re-read the Strategy Thread, it pretty much answers all of these questions, with the main point being you probably don't have anything to worry about. You need to stop answering their calls and you must stop discussing your situation with them - you are telling them way too much! I don't even think they are allowed to contact you since they have been discharged through a bankruptcy - you are no longer responsible for that debt. Call your attorney on that.
    Ignore the picture taker - they work for the bank and it's done to verify occupancy and assess value.

    Forget Zillow - it's unreliable information. You can get a better read on value by studying home sales of comparable properties in your area.

    I hope this helps - please re-read Strategy carefully.

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