When a foreclosure has been initiated, typically it is done by the first mortgage company. However, with a 2nd mortgage foreclosure, the lien holders of this mortgage can file their own foreclosure in an effort to protect their interest in the property. Bear in mind this is usually not the case. The reason being is that the lender holding the second mortgage would prefer to find a workable solution for all parties involved and avoid foreclose altogether.

With that in mind, know that if you find yourself extremely far behind on your second mortgage, but current on your first loan, the lender has the right to issue a 2nd mortgage foreclosure on the house. As you can see, taking out a second mortgage is not without risk. It is extremely important that you go over your budget with a fine toothed comb before applying for a 2nd mortgage. If at anytime you find yourself unable to keep up those payments, you could end up losing your home.

You may not know this but any lien-holder has the ability to try to push through a sale of your property by foreclosure. The kicker with this is that usually it’s the first mortgage that gets paid off from the sales proceeds. Foreclosures are sold at a discounted price leaving only enough cash to cover to first lien. All other liens are practically on their home. For this reason, you rarely see a 2nd mortgage foreclosure. Although lien-holders have that exclusive right, they often choose to work with you toward a solution since they will more than likely receive nothing from a foreclosure sale.