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Mortgage Foreclosure Takeover Article
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Second Mortgage Foreclosure vs. a First Mortgage Foreclosure
from:Getting a mortgage is a large step for homeowners. Many make jokes about mortgages and buying their homes calling it "signing their life away". Although it's not quite that serious, taking out a mortgage loan is a huge step. You'll be agreeing to make monthly payments, which include principal and interest, for many years, sometimes up to 30 years. Often by time you've finished paying off your loan, you'll have paid for it two times or more with the interest included.
If the borrower fails to make the scheduled payments on time, they risk losing their home to foreclosure. No one comes out ahead in the foreclosure, not the lender or the borrower. Whether it's a first mortgage foreclosure or a second mortgage foreclosure, it's a big headache for everyone involved. Banks don't like having an REO (Real Estate Owned) on their record and borrowers don't want to lose their home.
In addition to losing their home, they'll have a poor credit rating for many years, which will make it difficult for them to get any credit in the near future. Regardless of whether it's first or second mortgage foreclosure, their credit will be affected the same. You probably understand what a mortgage and mortgage foreclosure is, but many are unfamiliar with second mortgages or second mortgage foreclosure.
An individual buys a home for $100,000 and has a $20,000 down payment. They then take out a mortgage loan for $80,000. We're assuming the home is worth at least $100,000 because banks usually borrow up to 80% of the appraised value of the home. A few years later, the borrower decides to take out a second mortgage. He may be having difficulties making his first mortgage payment and needs cash to be caught up or may also just need extra cash for some expense.
At this time, his home is appraised at $120,000 and his first mortgage loan balance is down to $70,000. He, therefore, has $50,000 of equity to borrow on his home. Following with the 80% rule, he can probably get a second mortgage for up to $40,000. The second lender's name will be on the mortgage under the first mortgage lender because the first has precedence on the loan. Therefore, at this time the borrower owes $70,000 on his first loan and $40,000 on the second loan.
If the borrower cannot make payments on the loans and the loan goes into first mortgage and second mortgage foreclosure, the first lender will get their money before the second. If the home is foreclosed and sold for $100,000, the first lender will get the $70,000 owed to them, with only $30,000 left so the second lender will only get $30,000.
If there is a second mortgage foreclosure but not a first mortgage foreclosure, the second lender may be allowed to make payments to the first lender. Unless it can't be avoided, try to avoid a second mortgage for all concerned.
Mortgage Foreclosure Takeover News
WSJ UPDATE:Fannie Mae Reports Biggest Profit Since 2008 Takeover - Wall Street Journal
 Bloomberg | WSJ UPDATE:Fannie Mae Reports Biggest Profit Since 2008 Takeover Wall Street Journal Meanwhile, the share of mortgages that were three months or more past due or awaiting foreclosure declined to 3.7% at the end of March, compared with 4.3% one year ago and 3.9% at the end of 2011. As a result, Fannie can put aside less money for losses ... Fannie Mae Won't Seek Aid After Posting $2.7 Billion Profit |
Councilors question the wisdom of proposed Abbey Grill purchase - Fall River Herald News
Councilors question the wisdom of proposed Abbey Grill purchase Fall River Herald News That was before the master chef owner went bankrupt and the bank foreclosed on the historic Rock Street property, for which more than $200000 in back taxes is owed. After a rollercoaster discussion, the council voted unanimously to seek a public ... |
Bank of America Meets Shareholders as Protests Swirl Outside - San Francisco Chronicle
Bank of America Meets Shareholders as Protests Swirl Outside San Francisco Chronicle Moynihan presided as shareholders pressed him on complaints ranging from mortgage practices and foreclosures to customer service and political contributions. One attendee at the company's headquarters in Charlotte, North Carolina, where the bank is ... |
New York Hearings on 'Forced' Insurance in Foreclosure - ClaimsJournal.com
New York Hearings on 'Forced' Insurance in Foreclosure ClaimsJournal.com ... out policies when a homeowner fails to maintain coverage required by the mortgage, according to New York regulators. In some cases, the premiums are “exponentially higher” than regular homeowners insurance and can push homeowners into foreclosure, ... |
NY hearings on 'forced' insurance in foreclosure - BusinessWeek
NY hearings on 'forced' insurance in foreclosure BusinessWeek By MICHAEL VIRTANEN Premiums for so-called force-placed insurance have more than tripled since 2004, producing enormous profits for insurers and the banks that take out policies when a homeowner fails to maintain coverage required by the mortgage, ... |