Ideally, you should have responded to the notice that you received, indicating that you hold a valid mtg, and the amount of principle and defaulted interest due, as well as Atty fees. This response would have preserved your secured position as part of the suit.
The fact that you did not respond to the suit does not mean that you will not be able to collect from any overage from the sale. If at the Clerk’s Sale the property is bid in by the 1st mtg holder, then you will be foreclosed and have no ability to collect, whether you would have responded or not. If a 3rd party buys the property for more than is owed to the 1st mtg holder, including their back interest, Atty fees and costs, then this will create an overage bid. Funds will then be on deposit with the Clerk of Courts following the settlement of the sale. These funds can be claimed by any valid creditor, or the homeowner, by following the proper process, of which the Clerk of Court can advise you on.
Had you responded to the suit, you would have been in a better position to collect from an overage bid. As it is you should plan on being the first one to lay claim to these funds, which may enhance your position at this point. The fact that the Bk has been dismissed should be a positive for you collecting here, otherwise since your lack of answer has altered you being a secured creditor, the Trustee would have taken priority to your claims. Just plan on being first claim, if there is an overage, and you will still have a shot at coming out with some/all of your funds, depending upon the over bid amount. Obviously funds must be there in order for you to collect.
Additionally, you can still make a claim for a deficiency judgment against the homeowner. If the Debtor has a regular income, you would stand a good chance of a guarnishee of wages to collect what you are owed. If self employed then you would have to raid an account of deposit and obviously this is more difficult to do. Again, had you answered the foreclosure suit, you would be in much better position to make a deficiency judgment claim as well. Hindsight… is 20/20, as they say.
I hold a 2nd mortgage on a property that I sold a few years ago.
I have received letters in the mail from a bk attorney and the last one said it was being dismissed because the owner wasn’t making payments as agreed.
My mortgage is approximately 14k with about 2k of that in 2 years worth of back payments and interest.
My question is… was I supposed to file anything? If the house is bought at auction how will they know how much to pay me off? Would I get paid the original 12K that was recorded or was I supposed to file something prior to the sale?
Am I going to get paid or will I lose out?
I had an “investor” call to offer me 2k for this so he could buy it and make over 50K.
I told him I’d rather watch the house get sold and lose it all to teach the owner a lesson that he needs to pay his bills…
Re: I hold a 2nd, foreclosure sale tomorrow - Posted by DaveD (WI)
Posted by DaveD (WI) on January 23, 2007 at 09:50:50:
There are a lot of things you COULD have done to secure your position. No point in beating you up about it. But you said something that made me wonder about your state of mind. “…I’d rather watch the house get sold and lose it all to teach the owner a lesson that he needs to pay his bills…”
Forget about teaching lessons! And why should it be at your expense? Dumb. I’ve got news for you… he ain’t gonna learn a lesson! Trust me, he will be ungrateful for the “lesson” around the time his worldly possessions start kissing the curb, courtesy of the sheriff.
At the 11 1/2 hour, you need to know the system up and down, and act with conviction. Otherwise you are no more than a bidder if you care to protect your position. Odds are you will lose everything if you don’t bid. Nobody cares about what is owed to you. So if you want a shot at the 50K you better be ready to bid.
Next time, get a deed in lieu of foreclosure from the owner, work something out with the underlying lender, and resell to someone else for a bigger profit yet.
I was at an auction sale a month ago and the holder of the 2nd mortgage, showed up and bid the property up to where either someone had to beat his offer and he got his money or he purchased the property himself for the balance of the first mortgage. If you have the ability to put together the cash, you could simply do the same thing. Just make sure the underlying asset (the house) is worth more than the balance of your 2 mortgages combined. Also, some liens take higher priority than the actual loans so you will want to check with a title company to see if there are tax liens that you would also have to assume.
Just one thought as to how you might be able to be proactive. Definitely be careful about purchasing at auction, if you have never done this before.