Posted by wpage on July 12, 2002 at 12:30:26:
Len When you take back a 2nd. mortgage you subordinate your rights to the 1st. mortgage holder. Should the new owner/buyer default on your 2nd. mortgage then you could foreclose the same as any other mortgage holder. The difference is that you must make up any outstanding amounts owed to the 1st mortgage holder to bring the loan current. That also goes for any outstanding taxes not paid. You would foreclose and become owner again of the property with the 1st mortgage still in place upon which you will have to continue the payments. When taking back a 2nd mortgage you would want to be sure that there is still equity in the property and that the buyer has put down a decent deposit; otherwise you could end up without recouping any money. Oftentimes what happens is during the time the buyer is paying, the property is going up in value so that when you do get it back you can sell it at a higher price. I have done this several times and each time I have made money.good luck