Question on Foreclosure with 2nd

[alley]

I was just reading the sticky thread on workout options.

In a follow up answer it was stated that when the 1st mortgage goes for
foreclosure they assume the pay-off of the 2nd...Is this a fact??

I've been doing a lot of research on the internet trying to be sure of where I stand.
First I live in NE. I have a house that has a first of around 52,000 owed.
It might appraise at around 65 to 68. Now this mortgage was discharged
in chapter 7 bankrupcty in 2003. I did not reaffirm the debt. I signed the
paper that my intention was to but never did. But I have a 2nd on it also
for around 33,000. but this 2nd is also tied to a mobile home and is a first
on mobile home includes 2 city lots it sits on. The Mobile home isn't worth
33....maybe 15 to 20,000. The house has a FHA loan.

The 2nd is with a local small bank. The 2nd wasn't included in the bankruptcy.

If the mortgage co forecloses would they have to assume payment of the 2nd? In the process...
I hope someone can help answer these questions.
I live in the Mobile home and it is also in a different county then the house.

Thanks for all the help in advance
alley

[alley]

This must be a tough question no one has even attempted an answer.

Alley

[BK'd-Betty]

I'll take a wild guess - you're probably screwed on the 2nd - it wasn't included in your BK - if the first forecloses and doesn't get enough at auction to cover the 2nd - you'll probably have a definciency judgement against you, if your state allows for it. The first lien holder gets paid first and if your home is foreclosed upon, no the first doesn't become responsible for the payment or balance due on the 2nd. Sometimes the first will "settle" with the 2nd for pennies on the dollar to release the lien, but I believe in either scenario the remainder of the balance on the 2nd becomes an unsecured debt to you. Obviously since the 1st was included in your BK, you won't be responsible for a deficiency balance on the 1st - but don't be surprised if they try to get a judgement for it anyway.

Your situation is complicated. Probably more complicated than the experience and knowledge on this forum.

You should probably consult an attorney.

This must be a tough question no one has even attempted an answer.

Alley

[HHM]

I think the complication here is the cross collateralization of the home and the mobile home. I don't quite understand the circumstances.

If I understand you. You have a House and a Mobile Home.
You have a First Mortgage on the House in the amount of $52,000 that was part of a chapter 7 BK (on a side note, Mortgages are NOT discharged in BK, they are still enforceable against the property that secures them).
However, you have a Second Mortgage that is partially secured by the House and Partially secured by the Mobile Home, correct? This second mortgage on the house, is a 1st mortgage on the mobile home? What a weird loan, and honestly, it doesn't make any sense?

Let me ask you this, what were the circumstances surrounding how you got this second loan. Was this a second mortgage on the House to purchase the Mobile home, or a loan obtained to purchase a mobile home whereby the creditor requested that you partially secure the loan with your existing house, or something different?

I am really not sure how this will play out...do the loan documents specify exactly how second mortgage is allocated between the house and the mobile home?

[alley]

I hope I can explain a little better.

In Nebraska we have deed of trust. The house got the 2nd motgage due
to remodling. At the time I got it here in a small town where the banker
and I are on first name basis.. It's a small bank. It was a note due in 6 months or year... as it went on and I just rewrote the note interest collected and
also the note got larger due to needing more to finish what started.
re-writing went on for several years all the while the note collected interest.

This past year I needed to do something to start paying on the note.
I had this mobile home and had lived here before purchase of the house.
I had a couple other loans at bank i was paying on. So in order to start paying on the 2nd I rolled all of my notes into one loan. Keeping the amount I paid no more then I was paying as that's the most I could afford.

So in the process the 2nd on the house and the mobile home all got put
together. When I did file bankruptcy in 2003 I included the 2nd on the house
but having redone the note that don't count any longer ...RIGHT??

I will be talking to the bank here tomorrow and see as he has told me
if I sold the house he would release the lein he has. Hopeful that if
sold the extra will go towards the 2nd.
I know its a mess....I did put house up for sale today as I can no longer
make the payments on it due to illness.

Hopefully it will sell before it goes to foreclosure as today its only 4 days late. And 1st there is FHA.

I will try to let you know how this plays out...

Alley