Phoenix, AZ -- (SBWIRE) -- 07/10/2013 -- Home finances can be unpredictable. Especially with simultaneous loans. So what happens if a homeowner defaults on one of them? Credit-Yogi.com would like to explain the possibility of second mortgage foreclosure:

- The Lender’s Right to Foreclose
- Obtaining Priority
- Preserving Interest in the Property
- Negotiation Possibilities

Home Is The Best Investment You Have Ever Made! Save Your House from Being Foreclosed!

The Lender’s Right to Foreclose
When the borrower defaults, second mortgage lenders may take action. Even though the second mortgage lender is second in lien priority to other the first mortgage and other payments that funding may be distributed to beforehand, second mortgage laws say they always have the opportunity to pursue foreclosure.

However, unlike first mortgage foreclosure, second mortgage foreclosure does not extinguish all other liens, only the liens that are junior to it. So it is different than a first mortgage foreclosure, which extinguishes subsequent liens.

Obtaining Priority
The second mortgage lender still does not have entitlement to the property. The first mortgage is still attached to the property, and may be retained if the borrower is current on payments. The second mortgage lender needs to place themselves in clear priority in the series of liens to obtain the property and recover their losses.

Preserving Interest on the Property
The first mortgage retains interest over the property. When it forecloses, the second mortgage lender only recovers the auctioning surplus. Recently, experts say that the balance of many mortgages exceeds the value of their homes.

Since second mortgage lenders do not want to be in the position of being extinguished by the first mortgage, they may take a strong position. If they foresee losing their interest, they may absorb the first mortgage and acquire first position in the order of liens.

Negotiation Possibilities
Because many homeowners are underwater these days, meaning that they owe more than the value of their homes, it is unlikely that second mortgage lenders will take over the first mortgage. However the percentage of homeowners underwater was down to under 20% in the first quarter of 2013. If those discrepancies flip, more lenders may opt for foreclosure in the future.

Because foreclosure is mostly viewed as an economic loss, oftentimes the lender will prefer to work out the loan with the Homeowner. If homeowners are earnest about their hardship and are likely to declare bankruptcy, lenders may offer a low percentage lump sum option. If the borrower have recent good payment history, lenders will often propose a loan work out plan, making adjustments to the pay structure to meet the needs of both lender and borrower.They may also offer forbearance, lowering or suspending payments for periods of time.

About Credit-Yogi
Credit-Yogi.com is a consumer web information and services resource. Their well-connected support service will assist concerned homeowners with questions about their second mortgages. Call 866-964-9644 for a free consultation.