The second mortgage lender can file a civil or deficiency judgment to collect the unpaid debt. Or else, he may issue a charge-off if he fails to recover the entire loan balance after a first mortgage foreclosure.

Scenario: I have a foreclosure soon to take place on my first mortgage. What happens to the second mortgage if it is paid up to date? I was so stupid that paid a company XYZ $1000 to negotiate a plan for paying the first loan. they promised me that the first mortgage lender would surely accept their plan. But they dropped the ball and the first lender won`t take anything. Now, it`s just 10 days left for the foreclosure sale. The lender is simply trying to blame it on me. Is there anyway I can get back the $1000? What`s going to happen when they sell off the home? Will the sheriff come and keep all my possessions if I`m still there in the property? I`m so upset, I could have used the $1000 towards the first mortgage instead of paying XYZ. What do you suggest now?

Solution: Once the first mortgage lender forecloses your property, he will sell it to the highest bidder in the foreclosure auction sale. The sale proceeds will be used to pay down your first loan and then the second. If there is a shortage, and the first lender fails to retrieve the entire first loan balance, he may give you a time period as per the state or bank laws after which you`ll have to vacate the property. There`ll be a date set by the Sheriff on which he`ll come and evict you if at all you don`t move out.

Now, when the first lender carries out a foreclosure sale, the second mortgage lender can take the following steps:

• File a deficiency judgment against you if the foreclosure sale doesn’t cover the entire second mortgage loan balance.
• File a civil judgment against you in court or garnish your income.
• Bid for the property at the time of foreclosure sale in order to recover the money the second lender has invested.
• Even after the first lender sells off property, the second lender can pay off the required amount of money to the first and get back property at the end of the redemption period.

Apart from the steps above, the second lender can also charge-off any unpaid debt after getting a part of the sale proceeds when the first loan is paid off. This means that the second lender considers the debt as uncollectible. But you still don’t lose your obligation to pay off second mortgage after foreclosure.

A 2nd mortgage charge-off will have a negative impact on your credit score. So, try to repay the charged-off debt and request the second lender so that he reports to the bureaus who can then update the status on your credit report as "Paid Charge-off" or "Settled Charge-off".

In case you don`t pay off the charged-off debt, it may be considered as income and depending upon the state laws, you may have to pay tax on the unpaid debt. However, if your lender forgives the unpaid debt, you may not have to pay tax provided you qualify for tax relief on mortgage debt forgiveness.

What I suggest is, save up your money for rent because foreclosure is inevitable as it`s only 10 days left for the sale. Also, try to negotiate with the second lender so that he accepts the amount that you can pay off in easy installments. This will help you avoid a charge-off being reflected on your credit report.

Bailout Lead To Mortgage Modification
By allowing these institutions to enter long-term leases with occupants of the foreclosed property or other parties to restrict the number of houses moving onto the market, the bill aims to keep unsold inventory down.

Real Estate Lead Calling Service
CHICAGO (AP) — The Chicago-Naperville-Joliet metropolitan area had the highest home foreclosure rate in Illinois for the first half of the year. A report released Thursday by Irvine, Calif.-based RealtyTrac show more than 63500.

Refinance For Refinancing Mortgage Leads
The drop in < fef ;b>foreclosure sales was likely the product of U.S. banks’ moratorium on home foreclosures, which they undertook as the government launched a round of programs to modify and refinance loans for at-risk borrowers.

Foreclosure is more profitable
Even when borrowers stop paying, mortgage companies that service the loans collect fees out of the proceeds when homes are ultimately sold in foreclosure. So the longer borrowers remain delinquent, the greater the opportunities.

Foreclosure Inventory Hits Record
In particular, foreclosures soared to new record highs in June, LPS found: The national foreclosure inventory rate during June was 2.86%, up 2.5% from one month earlier and a huge increase of 86.1% from year ago levels.

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