Filing for bankruptcy can eliminate your second mortgage debt. If an appraiser determines the value of your home is less than your first mortgage, or is upside down, Chapter 13 lien stripping may be possible. The bankruptcy court essentially converts your second mortgage into an unsecured debt.
In order to remove your second mortgage off your property you must initiate an adversary proceeding or file a lien stripping motion with the court. Most courts require that you file a lien stripping motion that will allow you to obtain a court order approving the removal of your second mortgage.
Can a 2nd lien foreclosure?
Legally, all property lien holders can force a property into foreclosure, regardless of their seniority on property titles. It’s much harder for a second mortgage lender to foreclose, however. That’s because senior lien holders are paid first, with junior lien holders sometimes left with no sale proceeds to claim.
What happens to second mortgage liens in foreclosure?
But if the property had sold for only $200,000 at the foreclosure sale, the total amount would go to the foreclosing lender. The second mortgage lender and the judgment creditor would receive nothing and their liens would be wiped out in the foreclosure. However, this does not mean that the debt disappears.
Can a mortgage lien be wiped out in a foreclosure?
Generally, a home foreclosed for property taxes will see any existing liens wiped out by that foreclosure, though not always. Homes foreclosed for delinquent mortgages, however, might have second and third mortgages, judgment liens and various creditor liens that survived foreclosure.
Can a Hoa lien wipe out a second mortgage?
Because the Declaration was recorded before the second mortgage, the HOA lien is technically “senior” to that mortgage—even if the HOA lien was recorded after the second mortgage. As a result, the second mortgage lien will then be wiped out in an HOA foreclosure.
What happens to junior liens in a foreclosure?
The matter of priority typically comes up in foreclosure actions because, if a senior lienholder forecloses, the foreclosure wipes out any junior liens. But if a junior lienholder forecloses, the foreclosure is subject to senior liens. What Happens to a First Mortgage After an HOA Forecloses?
