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What is a real estate mezzanine loan?

Mezzanine financing is a hybrid of debt and equity financing that gives the lender the right to convert to an equity interest in the company in case of default, generally, after venture capital companies and other senior lenders are paid.

What is a senior secured bond?

Senior Secured Bond means a debt security (that is not a loan) that is (a) issued by a corporation, limited liability company, partnership or trust and (b) secured by a valid first priority perfected security interest on specified collateral.

What is 2nd lien mortgage?

A second mortgage or junior-lien is a loan you take out using your house as collateral while you still have another loan secured by your house. … As a result, second mortgage loans often carry higher interest rates than first mortgage loans. By taking out a second mortgage, you are adding to your overall debt burden.

What rights does a second lien holder have?

In that case, the second mortgage holder has three fundamental options for protecting its interest in the collateral: pay off the first loan and foreclose on the property free and clear of the first deed of trust; exercise its cure rights and foreclose on the property subject to the first deed of trust; or let the …

What are senior liens?

n. the first security interest (lien or claim) placed upon property at a time before other liens, which are called “junior” liens. (

What is the only threat to a lender with a senior lien?

What is the only threat to a lender with a senior lien? Delinquent property taxes and IRS liens.

Is first lien the same as senior secured?

Within each group of debt, there are finer grades (or types) of rankings: First Lien Loan – Senior Secured. Second Lien Loan – Secured. Senior Unsecured.

Can a second lien holder foreclose?

Depending on the state, second mortgage lien holders might initiate foreclosure and then sue borrowers for any deficiencies or negative balances. California, for example, allows lien holders using judicial or court-ordered foreclosures to pursue borrowers after foreclosure for any resulting deficiencies.

Can a second mortgagee sell the property?

In certain circumstances, a second registered mortgagee may be able to access surplus proceeds of sale from a property which it did not hold a mortgage in priority of other creditors.

Can my second mortgage be forgiven?

Second Mortgages If you’re struggling to pay your first mortgage, you likely can‘t pay your second mortgage either. … While your primary mortgage lender may agree to forgive the debt if your home sells for less than what you owe, your second mortgage holder may not.

Can a second lien holder stop a short sale?

So, while the 2nd lien holder can certainly hold a short sale hostage and there are no laws you can use to force them to agree to a payout, there are still some alternatives to make the short sale go through to closing. Short sales are crafty games played by crafty players.

Who pays liens in a short sale?

In a short sale, you sell your home for less than the total debt remaining on the mortgage and the proceeds of the sale pay off a portion of the mortgage balance. The lender accepts the “short” amount to satisfy the debt and releases the mortgage lien. Short sales are one way for borrowers to avoid foreclosure.

Can a bank sell a house with a lien on it?

It’s a classic case of buyer beware — while most banks identify and deal with liens before the short sale goes through, it’s not unusual for banks to sell properties with liens against the title.

What happens if you default on a 2nd mortgage?

When you fall behind in payments on the second mortgage, the secondmortgage holder will probably initiate a foreclosure because it will recover part or all of the money it loaned to you once the property is sold at a foreclosure sale.

What happens if I can’t pay my second mortgage?

If your mortgage is not underwater or your second mortgage is partially secured, and you stop paying your second mortgage, the holder of the second mortgage will likely foreclose because it stands to recover all or part of the money it loaned to you from the foreclosure.

What happens when you pay off first mortgage but still have a second?

This is certainly possible, but once you pay off your primary, your secondary loan will take first position. … Basically, the second mortgage holder allows the new lender to pay off the primary mortgage and jump ahead into first position, leaving the second lender in a subordinate position.

Can a second mortgage foreclose if first is current?

Yes, a second mortgage holder can foreclose, even if you are current on your first mortgage. … After taking care of expenses, the mortgages will be paid off in order of priority; until the first mortgage is fully paid off, the second mortgage holder will not receive any funds.