Nothing happens to it. It still remains in second place.
The mortgage companies will end up fighting over the proceeds when your house is sold after foreclosure.
If the first mortgage is foreclosed the second mortgage lien gets wiped off the property by the foreclosure so the property can be sold free and clear of the second mortgage. However, the mortgagor still owes the debt to the lender and the lender can pursue collection of the amount due by a civil lawsuit.
Was the 2nd lien included in and discharged in your bankruptcy? If not, then that lien still encumbers the title to the property and is probably a debt you still owe.
AnswerThe first mortgage would have the first position on the lien. So if the second mortgage company foreclosed on the property - they would sell the property and the sale proceeds must go to pay off the first mortgage company first. Then, if there is anything left over, that money goes to the second mortgage company.For example, there is a first mortgage of 100,000 and a second mortgage of 40,000. The property is foreclosed and sold for 125,000. The first mortgage gets paid off (100,000) and the second mortgage company gets the remaining 25,000.The property owner still owes the second mortgage company the other 15,000.--------------------------------------------------------------------------------------------------------------Not true. Maybe different laws in different states but here the 2nd mortgage foreclosure sale does not directly effect the 1st mortgage. It remains a lien.
How do you get out of a second mortgage when the house has been sold on a short sale?
The second mortgagee can indeed go after you for payment.
The mortgage has to be resolved. Either it must be sold and the mortgage paid off, or the person inheriting obtains a replacement mortgage.
If your first mortgage is in the process of foreclosure that foreclosure will extinguish the second mortgage as to the real estate. The foreclosure of the first mortgage terminates all subsequent interests in the real estate. After the foreclosure the real estate can be sold free and clear of any subsequent mortgages or liens. However, the debtor remains responsible for the second mortgage debt.Any remaining proceeds from the foreclosure sale after the first mortgage is satisfied are paid toward the second mortgage. In some states the second mortgagee can seek a "deficiency judgment" in court against the debtor. However, even when possible it's not often done due to the costs and the slim probability the debtor will have the ability to pay.You should check your state laws.
what happens when you file bankruptcy and your second home you own as an investment is placed in the bankruptcy by mistake the house getsfor closed on and sold but no title search is done to see that there are actually two mortgages on the house who is responsible for the second mortgage
A charge off just means a bank has considered a bad debt. They still have the right to collect on it. Now it is tough for a second mortgage company or bank to foreclose, reason being that there are in second position. They can start but if foreclosure is followed through with. The first mortgage is paid first and they get what is left over. Remember the house has to be sold etc. Many times they will sell your debt of to a less scrupilous collector. If they do start contact your first mortgage lender immediately. They may have options. Hope this helps.
The mortgage company gets the money.
Yes, you can file a Chapter 7 to have the debt liquidated or a 13 to go into repayment.