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Posted by Bill H on October 24, 2006 at 20:44:40:
In Reply to: Second mortgage in a short sale posted by lily on October 24, 2006 at 19:26:33:
: I made an offer on a house that has two mortgages. My offer is less than the total amount the sellers owe. It does not completely cover the first and it covers nothing of the second. The first mortgage holder is fine with the deal but the second is refusing to agree. Can you tell me what the next step is -- can the second bank foreclose and sell the house at auction? Do you know if I will be able to try to buy the house before it goes to public auction? I am in Pennsylvania. Thanks!
If I understand your post...you are basically buying the house subject to the 2nd TD.
Sounds a bit unusual as the first will normally not take a short sale if the 2nd is not taken care of prior to the short sale.
Nor will they take a short sale if the 2nd is getting very much $$$.
YES. if the 2nd TD is not taken care of they can initiate foreclosure proceedings.
YES, the 2nd probably has a due on sale clause and can elect to call the loan.
In the scenario you are describing the 2nd would rise to a first position and be in the driver seat.
Are you capable of refinancing after the deal? Can you afford to make payments to the 2nd?
If you are refinancing the 1st...the new lender will require that the 2nd be taken care of prior to their funding and being subordinate to the old second TD.
Good Luck,
Bill H
