Is second lien debt secured?

Second lien loans are a form of secured debt. Unlike unsecured debt, second lien loans benefit from a pledge of specific assets of the borrower (eg buildings, equipment). Second lien loans will normally rank ahead of junior debt but behind senior (first-lien) debt.

Can my second mortgage be forgiven?

Your second lender may voluntarily forgive your second mortgage, including a home equity line of credit or home equity loan. Even if your lender lets you off the hook for the second mortgage, you may face an increased tax liability because the IRS treats certain cancelled mortgages as income.

What happens to second mortgage liens in foreclosure?

But if the property had sold for only $200,000 at the foreclosure sale, the total amount would go to the foreclosing lender. The second mortgage lender and the judgment creditor would receive nothing and their liens would be wiped out in the foreclosure. However, this does not mean that the debt disappears.

What happens when a lien is extinguished on a house?

The lien against your property is not the same as the debt you owe, Nolo states. Even if foreclosure extinguishes a lien, the lienholder may still be able to sue to obtain the money you owe.

What happens when a first mortgage is extinguished?

When this occurs, the first mortgage is extinguished, meaning it will not be paid back by the borrower, and the home is sold to recover the remaining balance. If there are enough funds, other liens, including second mortgages, may be satisfied.

Can a junior lien be extinguished in a foreclosure?

If contractors or the IRS took out a lien against your property, they’re junior lienholders as well. If the foreclosure sale doesn’t pay off the senior lienholder’s debts, junior liens are extinguished, even if the junior lienholder launched the foreclosure.