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The lender will likely not want to assume the liability of the junior liens from the property owner, and accordingly, the lender will prefer to foreclose in order to clean the title. In order to be considered a deed in lieu of foreclosure, the indebtedness must be secured by the real estate being transferred.
If the junior lien holder fails to object within the judicially established time frame, his lien is canceled and the purchaser's title is cleared. This effect is the same as the strict foreclosure that occurred in English common law of equity as a response to the development of the equity of redemption .
Second mortgages, commonly referred to as junior liens, are loans secured by a property in addition to the primary mortgage. [1] [2] Depending on the time at which the second mortgage is originated, the loan can be structured as either a standalone second mortgage or piggyback second mortgage. [3]
For lenders, the first mortgage — sometimes referred to as having the senior lien position — takes priority over any second mortgage, or junior or subordinate lien, attached to the property.
Judicial foreclosure: With a judicial foreclosure, the lender files a lawsuit and the borrower is notified of the non-payment. The homeowner has 30 days to make up the missed payments, otherwise ...
Key takeaways. If you’re facing foreclosure, the right of redemption gives you a legal pathway to keep or regain your home, by paying back the entire outstanding loan, plus interest and fees.
Liens that have attached to the title before the mortgage lien are said to be senior to, or prior to, the mortgage lien. Those attaching afterward are said to be junior or subordinate. [30] The purpose of this priority is to establish the order in which lienholders are entitled to foreclose their liens in order to recover their debts. If a ...
Because the wrap-around mortgage is a junior lien, the seller indirectly takes on the risk of the buyer defaulting on their original mortgage. In such an event, the lender of the original mortgage (not the wrap-around) could foreclose the property and take it away from the buyer.
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