What happens next when you own a house in Ohio that has a second mortgage and is now in foreclosure?

Answer 1

Either or both of the companies that hold your mortgages have apparently started foreclosure proceedings. You need to contact whichever ones are now processing the foreclosure (which may be both of them) and see if you can make arrangements to halt the foreclosure. This can be done in a number of ways, including rolling a payment back to the end of the loan period or paying the late payments up to date (which I imagine will require a loan), declaring a Chapter 13 bankruptcy (or possibly Chapter 7 bakruptcy -- 13 is more likely to keep the bankruptcy court from selling off the house anyway), or placing the house on the market and selling it yourself. If you don't stop the foreclosure, they'll evict anyone living there (about 33 days if properly conducted and unopposed), and eventually auction off the house on the courthouse steps. With the proceeds from the auction, the holder of your first mortgage will be paid off first. If sufficient funds remain after this, the second mortgage is paid off, and if money still remains, you'll be paid the difference. If the auction doesn't yield enough to pay off both mortgages, you'll still owe the difference. Houses selling at courthouse auctions typically don't bring nearly as much money as a regular sale so, if you can, stopping the foreclosure is likely the best course. If you have sufficient equity in the house, you can sometimes get the creditors to halt a foreclosure if you immediately place the house up for sale. If you go this route, be prepared to evacuate the house, get it in saleable condition, and get it listed FAST. In any case, foreclosure is usually the worst of all your options. Besides typically costing a lot of money, it puts a nasty hit on your credit that takes a very long time to time out. Most important, the worst thing you can do is to do nothing, sit back, and let this happen. Creditors usually select foreclosure as the last option -- it's a troublesome procedure and unlikley to end well for anyone. Talking to them will at least show good will. You should also consider getting some legal council. There are a few no-cost legal advice services that will answer questions about foreclosures for you. In most states, a properly run and unopposed foreclosure takes roughly between 2 and 3 months from the time you are served with foreclosure papers until the auction commences. NOTE: This is not presented as legal or investment advice. I am not a professional in these fields and I may well be wrong, so don't do anything that puts you at risk in any way based on this commentary. Please also note that answers offered over the internet from well-meaning strangers in no way takes the place of consultation with an attorney or financial professional.