Second Mortgage Foreclosure


If you are current on your first mortgage and fall behind on the second mortgage, can the second mortgage company foreclose on your house?


They can, but in practice, they usually don’t. Here’s why: in order to foreclose, the second lienholder has to pay off the first lienholder. Usually, a second lien is small in comparison to the first. Also, the amount of a second and first mortgage combined is often very close to the value of a property. Thus, there is often very little equity to cover foreclosure expenses, making the foreclosure economically unfeasible. This illustrates how second mortgages represent a higher risk to lenders, thus resulting in higher rates for those types of loans.

On the other hand, if there is a great deal of equity left, it may make sense for a second lienholder to foreclose. In “real-life,” however, that is seldom the case.

Answered about 9 years ago
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