Thursday, October 6, 2011, 10:36 AM
Posted by Administrator
There are four things that a second mortgagee (the company/bank/person/trust) that owns a second mortgage on someone's house can do if they are not paid.

1) Wipe it out. Send the borrower (mortgagor/homeowner) a letter that says, more or less: "You don't owe us anything. We're filing a Satisfaction Of Mortgage, so you can even sell your house without paying us a penny."

2) Foreclose. If the first mortgage consumes all of the equity in a house, it isn't a real good economic decision for the second to foreclose. They will be selling a house with a first mortgage that needs to be paid. The only sure winner will be the lawyer who files the case.

3) Try to collect/sue on the Promissory Note and ignore the mortgage; send it to a collections company; sell the debt (like most unsecured bad debt---credit card debt/personal loans--- is eventually sold) for pennies on the dollar to a lawyer or collection company.

4) Wait.

I have now seen second mortgagees do each of the above. There is no sense out there. Some will lose their homes over nothing. Some will have their debt forgiven.
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