How to foreclose my privately held 2nd mortgage. - Posted by Ivan

Posted by Anne_ND on May 16, 2006 at 13:34:12:

Have you tried to contact the buyer to find out what the problem is?

If you want to foreclose I’m certain there are state laws that would require you to notify the buyer of your intentions.

I’d hand this over to a [knowledgable] real estate attorney and let them deal with it since you are unsure of how to proceed in your state. But first I’d contact the buyer and find out what the issue is. Since they haven’t even sent one payment, it may be as simple as they don’t have an address to send the check to (sounds dumb, but I’ve seen it happen).


How to foreclose my privately held 2nd mortgage. - Posted by Ivan

Posted by Ivan on May 16, 2006 at 12:38:11:

I hold a private second mortgage on a house I sold in Feb 06. Stats are these:

My second worth $39,000
Guy owes $146,000 on a first to his bank
House sold for $195,000 (won’t appraise higher)
Guy who bought my house has no real equity

Looks like he’s heading toward foreclosure. I haven’t gotten any payments on my second. The bank holding his first mortgage appears current.

My question is should I try and foreclose even though I haven’t sent any late payment letters? My understanding is being that I’m in 2nd position I should try and foreclose now and get whatever money I can. House is in NY.

Any advice would be appreciated.

Re: How to foreclose 2nd mortgage. - Posted by B.L. Renfrow

Posted by B.L. Renfrow on May 17, 2006 at 08:21:59:

Your choices would appear to be either (1) find out what the problem is and if anything can be done to fix things. Does the buyer not have the income to make the payments? Does he simply not care and believe you won’t do anything about it? Could the terms of the loan be modified to enable him to begin paying? (2) Sell your defaulted note to someone else and let them handle the problem. The trouble with this approach is that your note at present is worth very little. You’d probably be lucky to get $1000 for it. (3) Initiate foreclosure proceedings.

New York is a judicial foreclosure state, and yes, there are certain procedures which must be followed. I’d agree with the other posters that it’s not a do it yourself project if you’ve never done one before. You need a lawyer.

They don’t call these throw away seconds for nothing. As you’re discovering, by the time you pay an attorney to handle the foreclosure, wait out several months with no payments and likely having to cover the first and pay for repairs and eviction, you’re looking at loosing significantly more money.

What you need to figure out is whether you’re better off recovering what you can, i.e. the property, or just cutting your losses and getting out now.

Whatever you do, you should do it soon. You don’t want this hanging over you indefinitely. Go talk to the buyer, talk to a lawyer and make your decision.

Brian (NY)

Re: How to foreclose my privately held 2nd. - Posted by John Corey

Posted by John Corey on May 16, 2006 at 14:57:50:


Read Anne’s reply as she is correct about having a lawyer handling the matter.

My question to you relates to when you wrote “get what ever money I can”

What money do you think you are going to get. You will pay the lawyer to foreclose. You will likely have to pay to keep the 1st current if the borrower stops paying. You are the prior seller so all that is going to happen is you get the house back (maybe damaged) and out some costs. What do you think you are going to get out of this foreclosure? It will likely feel like you are back to Feb '06 with less money and a house that is likely beat up.

I am not saying to delay. Just that you are going to pay to get back what you had as of last Feb and less to show for it.

John Corey