Welcome to Foreclosure Mortgage Help Guide
|
City Mortgage Foreclosure Article
. For a permanent link to this article, or to bookmark it for further reading, click here.
Second Mortgage Foreclosure vs. a First Mortgage Foreclosure
from:Getting a mortgage is a large step for homeowners. Many make jokes about mortgages and buying their homes calling it "signing their life away". Although it's not quite that serious, taking out a mortgage loan is a huge step. You'll be agreeing to make monthly payments, which include principal and interest, for many years, sometimes up to 30 years. Often by time you've finished paying off your loan, you'll have paid for it two times or more with the interest included.
If the borrower fails to make the scheduled payments on time, they risk losing their home to foreclosure. No one comes out ahead in the foreclosure, not the lender or the borrower. Whether it's a first mortgage foreclosure or a second mortgage foreclosure, it's a big headache for everyone involved. Banks don't like having an REO (Real Estate Owned) on their record and borrowers don't want to lose their home.
In addition to losing their home, they'll have a poor credit rating for many years, which will make it difficult for them to get any credit in the near future. Regardless of whether it's first or second mortgage foreclosure, their credit will be affected the same. You probably understand what a mortgage and mortgage foreclosure is, but many are unfamiliar with second mortgages or second mortgage foreclosure.
An individual buys a home for $100,000 and has a $20,000 down payment. They then take out a mortgage loan for $80,000. We're assuming the home is worth at least $100,000 because banks usually borrow up to 80% of the appraised value of the home. A few years later, the borrower decides to take out a second mortgage. He may be having difficulties making his first mortgage payment and needs cash to be caught up or may also just need extra cash for some expense.
At this time, his home is appraised at $120,000 and his first mortgage loan balance is down to $70,000. He, therefore, has $50,000 of equity to borrow on his home. Following with the 80% rule, he can probably get a second mortgage for up to $40,000. The second lender's name will be on the mortgage under the first mortgage lender because the first has precedence on the loan. Therefore, at this time the borrower owes $70,000 on his first loan and $40,000 on the second loan.
If the borrower cannot make payments on the loans and the loan goes into first mortgage and second mortgage foreclosure, the first lender will get their money before the second. If the home is foreclosed and sold for $100,000, the first lender will get the $70,000 owed to them, with only $30,000 left so the second lender will only get $30,000.
If there is a second mortgage foreclosure but not a first mortgage foreclosure, the second lender may be allowed to make payments to the first lender. Unless it can't be avoided, try to avoid a second mortgage for all concerned.
City Mortgage Foreclosure News
Foreclosure Filings Rise in Most Cities
Foreclosure filings climbed in three-quarters of U.S. metropolitan areas in the first half as high unemployment left many homeowners unable to pay their mortgages, according to RealtyTrac Inc.
Read more...New city council member ends dispute with bank
By Janet Zink, Times Staff Writer Friday, July 30, 2010 TAMPA City Council member Curtis Stokes has resolved his dispute with Progress Bank, avoiding foreclosure of nine properties he owns near downtown Tampa. "We came to a beneficial conclusion, something that worked out for both of us," Stokes said Friday. "It was never a situation where I was not paying. It was a situation where we were ...
Read more...Mortgage Foreclosures
These are mortgage foreclosures filed with the civil division of the Circuit Court for Jan. 11-Jan. 14. Names in bold are the subject of, or have an interest in, the foreclosure action. Lighter names filed the foreclosure action.
Read more...Senator Peralta tackles foreclosure
State Sen. Jose Peralta offers hope to those facing foreclosure. PHOTO BY EIZABETH DALEY Inspired by the high foreclosure rate across the country and in Queens, state Sen. Jose Peralta (D-Jackson Heights) joined allies City Comptroller John Liu and Assemblyman Hakeem Jeffries (D-Fort Greene) at City Hall on Tuesday to promote legislation requiring lenders and brokers to provide consumers with a ...
Read more...Extreme World, others to be sold in foreclosure
Four area business properties, including parts of the Grand Cambrian, are up for foreclosure sale in the next two months. Three are in the city of Wisconsin Dells, and one is in Lake Delton.
Read more...