How to Foreclose with 2 Mortgages

With foreclosure rates on the rise nationwide, the process of foreclosing with one mortgage can be tricky. But what about foreclosing with two mortgages? Lien holders on property are broken into two groups--the primary lien holder (first mortgage) and secondary lien holder (second mortgage). While this might appear to be a daunting task, this process can be much easier than one might think.

Instructions

Contact the Lien Holders

1. Contact the secondary or junior lien holder on the mortgage. These can be either 80/20 loans with conventional financing or a home equity loan or line of credit. You will need to provide the secondary lien holder with the notice of acceleration for the mortgage total, as well as the notice of intention to foreclose.

2. Be prepared to fax or mail documentation showing that you have the right as the bank-appointed trustee to foreclose on the property in question. This will entail obtaining an authorization letter from the first lien holder stating that you are her chosen trustee or representation.

3. Send anything time-sensitive via certified mail to ensure that the contact at the second lien holder's office has received it and signed for it. Since foreclosure laws vary from state to state, it's important to note that you will need to abide by state legislation in order to be successful in the foreclosure process.

4. Make a settlement offer with the second mortgage holder on the note. Because in foreclosure auctions the second lien holder is at a higher risk of losing any interest in the property in question, he will be more inclined to take a settlement offer from you and sign off on the notice of foreclosure.

5. Obtain the paperwork from the secondary lien holder that grants you the blessing to foreclose on the property. Include the settlement information with this offer, and begin the foreclosure process with the primary lien holder on the account.

Foreclose with the Primary Lien Holder

1. Prepare documentation for the primary lien holder in much the same way that you did for the secondary lien holder on the account. Place all account numbers, property numbers and legal descriptions on all paperwork that is sent to the mortgage company.

2. Be prepared to send things more than one time. Due to the amount of paperwork involved with foreclosure proceedings, mortgage companies are inundated with stacks of paperwork and it is easy for them to misplace or lose paperwork. Always call to follow up and ensure that the mortgage company has received what you have sent.

3. Get the notice of foreclosure from the primary lien holder. Once this is in place the mortgagee will be notified via certified mail and you can begin foreclosure proceedings.

4. Go to the county clerk's office where the property is held and file a the paperwork you have obtained from the mortgage holders showing the approval to foreclose on the property. The county clerk will assign you a file number and your property will be posted on the courthouse steps as a foreclosure file.

5. Prepare photos of the property for the foreclosure auction on the first Tuesday of the month, also known as "Foreclosure Tuesday." Bank-owned properties are auctioned off to the highest bidder from the county courthouse steps on the first Tuesday of each month. This will ensure that you have all necessary documentation to sell the foreclosure for the maximum amount of the bank's interest during the foreclosure sale.

Tips & Warnings

• Always keep copies of documentation sent and received in separate files in regard to each property in question. Note that some states have given consumers the right to redeem or reinstate their interest in the property so not all foreclosure postings will be sold at auction.