Consequences of defaulting on second mortgage after foreclosure on the first?

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In Oregon, I defaulted on both my primary and secondary mortgages on a piece of investment property (not my primary residence). Recently, the first mortgage lender foreclosed on the loan and took the property. Now my secondary mortgage ($ 65K) lender is coming after me to negotiate a settlement for payment . My questions are: Are there any additional consequences to one’s credit rating by defaulting on the second that haven’t already occurred by defaulting on the first? And is there a greater risk of law suit or judgment against me on the secondary loan default than the risk that I already have on the first? In other words, since my primary mortgage has defaulted and gone to foreclosure, is there any motivation for to negotiate with the secondary lender?

6 Comments
  1. Reply
    the kid
    February 15, 2011 at 12:21 am

    The 2nd mortgage is entitled to their money of course. They WILL sue you most likely if you don’t work with them, b/c they have received nothing. Yes, TWO defaults is worse than one.

  2. Reply
    joE4
    February 15, 2011 at 1:00 am

    You owe them money, the holders of the second mortgage wants their money.

    The 2nd-mortgage holder expects that they will not be able to get all their money, but they will need documents to show the IRS as to what their losses are from this 2nd-mortgage.

  3. Reply
    Rick Kern
    February 15, 2011 at 1:49 am

    Interesting question. You are on the hook for the loan until you negotiate a deal or go through bankruptcy. I would recommend talking to a lawyer or if you have a friend that is a banker.

    I am assuming you have a house, the lender could easily sue you and get a lien against your house.

    Good Luck,

  4. Reply
    goz1111
    February 15, 2011 at 2:41 am

    yes there is a greater chance the second will file suit against you, verses the first which at least received titled to the property

    The question to you, do you have other assets? if so they are subject to seizure if the second would peruse a civil suit and receive a judgment against you

  5. Reply
    Iffy
    February 15, 2011 at 3:38 am

    You owe that money. Your credit will be destroyed when they report to the credit agencies and sue you for full amount, penalties and court costs. They will be awarded the judgment and will freeze your bank accounts and put a lien on your primary residence

  6. Reply
    Walter Fountain
    February 15, 2011 at 3:50 am

    http://foreclosuremortgageoptions.com/ has a lot of good information on everything about how to protect your house from becoming foreclosed, foreclosure laws, and how to buy houses on foreclosure auctions.

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