I have a 1st and 2nd Mortgage on my home. The 1st Mortgage is currently being foreclosed on by the 1st Mortgage Lender. However, my 2nd Mortgage Lender has now filed a completely separate action against me for the amount I owe them, but they are not foreclosing. Instead they are suing solely on the Promissory Note and did not respond in the foreclosure action on my 1st Mortgage. Can the 2nd Mortgage seek a Judgment against me before the 1st Mortgage finishes their foreclosure action?
Generally speaking, the 1st Mortgage (the mortgage used to purchase the property) has priority over all other mortgages on the same property executed around the same time or later. In Florida, the mortgage that is recorded first takes priority. In other words, for a 2nd mortgage, one not used to buy the property, to take priority over a 1st Mortgage, the mortgage must have been executed and recorded without notice of the 1st Mortgage.
When a 1st Mortgage successfully forecloses, all junior interests in the property, including the 2nd Mortgage, are eliminated. However, this is not the case where a 2nd Mortgage or other junior interest forecloses. When a 2nd Mortgage forecloses, all senior interests remain in place and the buyer takes the property subject to the 1st Mortgage. However, in order for junior interests to be eliminated with the foreclosure of a 1st Mortgage, the 2nd Mortgage must be made a party to the foreclosure action.
After a foreclosure and the property is sold, the proceeds from the sale are dispersed in this order:
1. Foreclosure costs are paid; then
2. The Mortgage foreclosed on is paid; if any money is left over, then
3. Junior Mortgage interests are paid in their order of priority.
Today, the proceeds from a foreclosure sale generally never are enough to pay off the mortgage foreclosed upon (usually the 1st Mortgage). Therefore, 2nd Mortgage holders do not receive any proceeds from the foreclosure sale of a 1st Mortgage and loose there interest in the property entirely.
Therefore, in an attempt to collect what is owed on a 2nd Mortgage and if the 2nd Mortgage holder thinks there is enough money available from the borrower, the 2nd Mortgage can file their own independent action against you directly based on the balance due on the Note instead of waiting for the 1st Mortgage to complete a foreclosure action and hoping there will be excess proceeds. This can be done irrespective of what the 1st Mortgage does.
When filing their own action, a 2nd Mortgage holder has two options. They can choose to file a foreclosure action, or sue based on the Note to collect the balance owed, which the 2nd Mortgage holder chose to do in this scenario.
If you are facing foreclosure, contact a Florida Defense Lawyer or a Jacksonville Foreclosure Defense Lawyer today for a complimentary review!
