Home Equity Line of Credit

hi vikkeedee,

if you cannot pay the second mortgage, the lender has the rights to foreclose the property. however, if the lender does so, he will have to satisfy the dues of the first mortgage lender. in order to avoid that, the second mortgage lenders normally don't foreclose the property. rather, they charge off the loan and assign it to a collection agency.

Part of what will happen depends on the equity you may have in the home. If there's sufficient equity, the secondary lender might take it upon themselves to foreclose. As Adonis noted, however, that's a rare situation in the current economic climate - with declining values, secondary lenders aren't likely to be made whole in a foreclosure action. The result - a charge off on their books and referral to a collection agency - is more often the case.