What happens if I default on a 1st mortgage but not on a second?

Here's the story in a nutshell. I purchased a condo in 2005 on an ARM. Just out of a divorce, I decided to consolidate some debt with a home equity line of credit called a 125% loan. Bad move, since I didn't first refi the ARM. Now, the housing market has slumped, my property value is down, I have negative equity, and I can't refi. The ARM has gone up and is due to go up again in a couple months. My payment has doubled and I can't afford it. What will happen if I default on the 1st mortgae but remain current on the second? In other words, what happens to the second mortgage, and how might I be liable even if the payments are current on that loan?What happens if I default on a 1st mortgage but not on a second?
Simple. The first morgage will foreclose. It will pay itself off from whatever the foreclosure sale brings in, including paying off its costs in having to foreclose in the first place. If there is any money left over, it will go to pay off the second mortgage. If the money from the sale isn't sufficient to pay off both, you will wind up owing the rest and getting a really bad credit report. And you condo association might also get involved in foreclosure if you dont pay the assessments. Sorry%26gt;What happens if I default on a 1st mortgage but not on a second?
If the first forecloses they drag the 2nd into the foreclosure.
The first has primary position and will repo or foreclose on the property - the second will only get paid if there money from the sale to do so. The second holder is in a lousy position for colateral but will still come after you. You could go to the holder of the first and try to renegotiate - the alternative is that they will own a house valued lower than what they are owed. They should prefer to have lower steady payments - not a loss.
Your second mortgage holder has the choice of either protecting it's position by bringing the first current and pursuing it's own foreclosure or allowing the first mortgage to foreclose them out and pursuing you for payment on the note up to and including the possibility of suit and judgment.
newmexico is correct....the second gets dragged into it by the first...this will be out of your control



good luck...and stay away from ARMs in the future