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Have a 1st and 2nd Mortgage on home that just foreclosed.. What next?

Tacoma, WA |

My 1st Mortgage Lender just foreclosed my hm. They are putting it up for sale. Collection Agency for 2nd Mortgage just contact me asking for payment. They said the hm will not be able to close anyway until I pay them because there is a lien on home.
Is that true?
Also, what happens if I am not able to pay collection agency?

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Attorney answers 1


I am not certain that I understand your situation. I think you are saying that the first lender has started (but not completed) a foreclosure action. Is that correct? If so, is it because you are delinquent in your mortgage payments to the first lender? If you cannot pay the first lender to prevent the foreclosure sale, I can think of no reason why you should pay the second lender unless you are contemplating selling your home before the foreclosure sale (see below). If the first lender's foreclosure sale occurs, neither you nor the second lender will have any rights in the property. The senior lienholder (first lender) will transfer title to the buyer at a foreclosure sale free and clear of the junior lien of the second lender and your interest in the property.

Perhaps you are thinking about selling your home before the foreclosure sale can occur. In that case, the collection agent is correct in stating that you must make arrangements (not necessarily full payment) with BOTH lenders to release their liens so you can convey clear title to a prospective buyer. If this is your intention, you probably should hire an attorney (if you can afford one or get one to help you on a pro bono basis) to negotiate with the two lenders (and any other lienholders) on your behalf.