Two Mortgages with seperate companies

[Wizardree23]

I was wondering if anyone knew what would happen if you had an 80/20 loan, the 80 with one bank and the 20 with another, and were behind on the 20% but current on the 80% loan? Can they foreclose on the loan you are behind and take the house?

[SinkingFast]

The 20% Second Mortgage Holder can indeed Foreclose on their note on your home.

Since you're current on your primary mortgage, I'm not sure what would happen after that. If there would just be a lien placed against your home or what.

Legal cases are mixed as to what will happen.

Generally, the original borrower is in default on both mortgages.

In one scenario, the Second Mortgage Lender can pick up making payments on the first until the Second Mortgage holder could sell the home and get their investment back.

Another scenario, the First Mortgage Holder claims Default because the Second Mortgage Holder is not the original borrower. The First then demands Cure, or payment in full from the Second Mortgage Lender, or Forecloses on the home if the Second does not pay.

You might oughta call your Second Mortgage Lender and see if you can work out some sort of deal with them. Reduced payments, extension of the note term, whatever. Apply for a Hardship to get the note placed into Forebearance temporarily.

[Wizardree23]

Both mortgages were with Washington Mutual and they sold the second to some other company. I was behind with both of them, but thought if I was going to catch one up it should be the larger of the two. Now I was wondering if I could stop them from foreclosing if it came to that. I have not gotten a letter from the second mortgage holder yet. Just s statement showing I am behind. Thank you for your advice and response.

[SinkingFast]

You need to check the Foreclosure Laws in your State. You also need to read thru your Mortgage and look for a "Right to Sale" clause in the Contract.

Some States allow for very quick Foreclosure. When the grace period ended after our 2nd missed payment, our Lender declared default and moved to Accelerate. We stalled a bit, but our house will sell at auction, on the Court House steps in a little over a week from now.

Other States, the Foreclosure process is rather lengthy. Always Judicial. In New York, for example, it can take, on average, 18 months to Foreclose a property. NY always goes Judicial and it takes a long time.

Depending on the State you live in, you may be able to catch up before your Lender actually gets to Foreclosure.