Posted by Michael Morrongiello on December 30, 2005 at 14:58:29:
Joe:
As a 2nd and juinor lienholder subordinate to the 1st lien Mortgage lender your rights to reinstate the 1st lien and start your own foreclosure action on the 2nd lien will really come down to the Oklahoma State laws regarding foreclosures in the “OK state”.
Some states allow for the 2nd lienholder to do this but in other instances where the 1st lien filed their foreclosure action FIRST (before the 2nd lienholder), and where they have “accelerated” their loan, the first lienholder may not be obligated to accept your funds as the 2nd lien lender or the funds of any party that might wish to reinstate. Under the latter scenario you will have to put up & advance the funds to pay off the 1st lien in FULL while you initiate and follow through on the foreclosure with your 2nd lien.
Also the amount of equity that exists in a property above and beyond the debt owed will also allow you to strategize as well.
EG. We had a smaller high risk 2nd lien that sat behind a much LARGER 1st lien on a property we had sold years before. The buyers really did not have much in the way of equity in the property at the time of the sale but when the foreclosure action was started by the 1st lienholder the property had substantially increased in value over the years. We decided to do nothing and let the 1st lien lender foreclose. At the courthouse auction enough money was paid (bid) for the property so that it covered the 1st lien lender loan, their costs, and also our 2nd lien as well.
Depending on the #'s, and what equity exists you might also find someone willing to purchase the 1st lien for you with their cash - providing you intend to follow through on the foreclosure of your 2nd lien. You would then give them a part of the upside profit when all is said and done.
Hope this helps.
Michael Morrongiello
www.sunvestinc.com