What to do When First and Second Mortgages Foreclose

Note: The DearEsq free 'ask a lawyer' site is offered as a free informational service to the public and is not intended as legal advice. Laws vary from state-to-state, and in addition every situation is unique, and relevant facts may not be known. The answer to the question posed below may not apply to in your state or to your situation. For legal advice in your state and your situation you should consult with an attorney in your state who is familiar with the rules and laws in your state.

“I had financial difficulties and fell behind on my first mortgage payments. To avoid foreclosure, I took out a second mortgage from a private investor to pay the back payments. I had unforeseen problems which made me fall behind on the second mortgage and slow paying the first. The investor filed for foreclosure so I filed for Chapter 13 protection. After on time payments on that for one and a half years, my case was dismissed for missing one month and the first and second mortgages foreclosed on me. However, the investor stepped in and payed my back payments on the first to keep it from going to the courthouse steps. The second mortgage foreclosed tacking on the extra money to what was owed.

The investor who purchased the foreclosure allowed us to stay in the house if we paid him 1200 a month and used his address for the first mortgage payment slips. No money was to be applied to the 2nd mortgage he purchased. I missed 1 payment after a year and he refused to deal with us. He evicted us. It’s been 2 years since that happened. He has renovated the house and has it on the market and he never paid the first which is still in my name.

Question: If you purchase a second mortgage at foreclosure that is for $7000 and the first is still in force at $100000, is the house totally his?”

Question: The first mortgage holder still has their $100,000 lien on the property. That likely is a recorded interest that will need to be cleared whenever the house is eventually sold. It sounds like by the terms of your second mortgage you lost possession of the property. Just because you lost possession does not mean that the first mortgage holder lost their interest in the property.