Many people who need extra funds to pay off a loan, medical expense or whatever may find themselves getting a second mortgage. Then, overtime, if those people have problems making the monthly mortgage payment, they may find that they will be foreclosed. Problem is which one of the mortgages is doing the foreclosure. If it is the first one, then that action might wipe out the second mortgage and the bank or lending firm that provided that will definitely not be happy about it. And that second mortgage holder will probably use the only available remedy open to it, sue for breach of contract.

On the other hand, if a second mortgage holder sees a foreclosure coming, it could reinstate the first mortgage by paying the holder of the first mortgage your past payments and delinquencies up to the entire past due amount. Now the second mortgage holder has control of the first mortgage and will pursue you to recoup its costs. It could file a notice of default and may foreclose. The least the second mortgage holder will do is foreclose so it isn’t wiped out.

One alternative open to you in a situation like this is to file for bankruptcy. If accepted by the courts, then under Chapter 13, the homeowner would still be obligated to make partial payments over a period of years. If the homeowner is lucky enough to be classed under a Chapter 7 he or she is totally discharged of any financial obligation. However, it should be noted that a Chapter 7 judgment is very difficult to obtain.

A homeowner who finds himself or herself with the possibility of losing their home through foreclosure could opt for a short sale to get themselves from under. A short sale requires the homeowner to sell the home for the best price possible. Such an action needs to be negotiated with the lender and, if the house has two mortgages, then both lenders must agree to the action.

Why would lenders be willing to do this? Because the lenders want to get something back on their investment. By selling your home they can be assured of that. If, however, the lenders just went on with a foreclosure, then they could lose tens of thousands of dollars in expenses for going through the foreclosure, for fixing up the home for re-sale and for marketing and selling the home. Or, if the holder of the second mortgage, they could end up out in the cold and get nothing.

Find out more from the Mortgage Relief Formula or a video on short sales and your credit. Both can be obtained through the internet.

And watch this video on short sales and foreclosures. This is a screen shot — just type in your email and I'll get you to the real video. Thank you.