What happens to the 2nd mortgage if the first mortgage take the house back.
(do they get pied if they sell the house)
Thank you in advance for all your reply’s
The 2nd mortgage holder gets nothing. They have the opportunity to purchase the house themselves at the foreclosure auction or even to foreclose on their own 2nd position, but either choice requires that they payoff the 1st lienholder. Its usually not worth throwing more money into a bad situation so they let the property go.
So what happens if the first and second are with the same bank? Say countrywide 
-Karim
Hi Karim,
Even if it is the same bank, the 2nd mortgage will be “wiped-out” if the first forecloses.
However the debt on the 2nd note is still owed by the debtor (now as unsecured debt) if the high bid at the sale does not cover it.
Many times the bank’s open bid will be the combined amount of both debts, unless they plan to go after a deficiency judgment.
This will vary greatly from state to state.