What happens to first mortgage when second mortgage forecloses?

What happens to first mortgage when second mortgage forecloses?

You should understand that your second mortgage is not the primary collateral holder; the first mortgage would hold have honor and the first mortgage will always receive its funds if the house is foreclosed before others get what’s left.

What happens to a second mortgage in Chapter 7?

If you file for Chapter 7 bankruptcy, you cannot get rid of second mortgages, home equity lines of credit (HELOCs), or home equity loans. Filers in the Eleventh Circuit Court of Appeals, are no longer able to strip off (remove) these types of liens in Chapter 7 bankruptcy.

Can a 2nd mortgage be charged off?

Answer. Your second-mortgage debt hasn’t been canceled or forgiven. A “charge off” is an accounting term that means the creditor no longer considers the money you owe as a source of profit but instead counts it as a loss. A charged-off loan—unlike forgiven debt—is still considered an obligation that you must pay.

Can 2nd mortgage lender foreclose?

A second-mortgage holder can initiate foreclosure proceedings even if the first mortgage is not behind on payments. The second-mortgage lender must still take all the necessary steps in the foreclosure process, and must also notify the first lender of the intention to foreclose on the property.

How do I settle my second mortgage after Chapter 7?

How to settle a second mortgage

1. Contact your second mortgage lender to discuss the debt.
2. Make an offer to your second mortgage lender.
3. Remind your second mortgage lender that you know your rights.
4. Put your agreement in writing.

Can you strip a mortgage in Chapter 7?

Lien stripping in Chapter 7 is not permitted. The United States Supreme Court in Dewsnup v. Timm, 502 U.S. 410 (1992) barred Chapter 7 debtors from stripping a creditor’s partially-secured claim down to the value of the underlying property. Likewise, the United States Supreme Court ruled in Bank of America, N.A. v.

What rights does a second mortgage holder have?

The second mortgage holders may foreclose on a property but under certain specific situations. Usually, the mortgage payments are supposed to be made on time and each lender, irrespective of the order of the loans, can legally take actions to seize your real estate property to recuperate the money.

Can I sell my house if I did not reaffirm?

Since you didn’t sign a reaffirmation agreement on your mortgage, you’re not liable on the debt but the lender still has a lien on the house. If the mortgage for more than the house is worth, then you can’t sell it unless you get the bank to agree to a short sale.

How can judicial foreclosure be stopped?

If your foreclosure sale is scheduled to take place in a matter of days, you can stop the foreclosure in its tracks by filing for bankruptcy. The lender may try to get around the automatic stay by filing a motion to lift the stay and asking permission from the court to continue with the foreclosure proceeding.

Should I reaffirm my mortgage after filing Chapter 7 bankruptcy?

If you are current on your mortgage payments and file Chapter 7 bankruptcy, you may have been advised by your attorney not to reaffirm your mortgage during the process – or your lender may have refused to reaffirm. Mortgage lenders typically prefer you to reaffirm the debt because it gives them more leverage and options.

What happens to my second mortgage if I file Chapter 7?

Say you owe $75,000 on the second mortgage, file chapter 7 bankruptcy, and pay them nothing for three years. If the value of your house is still less than you owe on the first, and you offer them $7000 to call it even, they might agree.

Can I deduct my 2nd mortgage debt from my bankruptcy?

If you have previously filed a bankruptcy and then the 2nd mortgage lender cancels the debt and sends a 1099 for the “forgiven” balance next year, then you are able to deduct the amount because it was already previously “forgiven” or when you filed your chapter 7 bankruptcy and received your chapter 7 bankruptcy discharged. 6.

Will Chapter 7 bankruptcy remove a lien on my house?

Chapter 7 Bankruptcy does not remove that kind of lien from your house, not in the 9th Circuit Appeals Court’s jurisdiction. Therefore, if the value of the house is high enough, then your 2nd mortgage lender can foreclose that lien, but in order to do so, it must pay off the 1st mortgage and any unpaid property taxes first.