What Happens if You Default on a Second Mortgage?

Video Transcript

"Hi, my name is Matt McKillen. I'm with Innovative Financial Group. The question posed to me today is, What happens if you default on a second mortgage? Well a second mortgage is still a loan that's on your property just like your first mortgage. So basically the process is still the same as it is on your first mortgage. A lot of people don't understand that because a lot of times because the loan is smaller, has lower payments. But in the event of a default on your loan, there is a clause in your mortgage and your note that basically states that the lender has the ability to either foreclose on your mortgage or if it's a deed of trust, on your deed of trust. This is a foreclosure process just like on a first mortgage. There's generally a redemption period where you can come in and make up your late payments. It's basically a legal action against you to collect your money. If in fact you do not redeem the loan and there's a foreclosure sale date set, even though you may have been making your first mortgage payments completely on time, you can still lose your home to a foreclosure sale at the court house steps in your city or your county. So again, the second mortgage default is treated exactly like the first mortgage default. The best thing that you can do is to negotiate with your lender, maybe extend the payments, modify your loan. There's a lot of options available these days to avoid foreclosure. Again, my name is Matt McKillen. I'm with Innovative Financial Group."