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What if a 2nd mortgage is charged off by the lender and then sold to a collection agency do they retain the rights to foreclose?

by operationreach541 from San Ramon, California. Jun 23rd 2021 Reply


Bert Carpenter (BertCarpenter)
#1 ranked lender in Arizona - 2,300 contributions

Unless the second was discharged in a bankruptcy, the debt is valid, regardless of who owns the underlying note. Yes, the collection agency that currently owns the note could, and if the amount is big enough, would likely foreclose on the 2nd to recapture their money, including all accrued late charges, interest and other expenses incurred. If the 2nd holder foreclosed, they would have to keep making payments on the first, could evict you and sell the property out from under you. If you have equity that you don't want to lose, now is the time to look at options.Bert Carpenter, The LoansA2z Team of NEXA Mortgage ~ NMLS 40586 ~ Certified by The National Association of Mortgage Professionals as a Certified Veterans Lending Specialist.Licensed in AZ, CA, GA, IL, OR & WA... In fact, NEXA is licensed in all states except MA and NY so give us a call. ~ www.ApplyYes.com 480-889-9000.

Jun 23rd 2021
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Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 4,468 contributions

Bert is correct, selling the debt to a collection agency does not release you from the ability to foreclose. To fully foreclose, they would have to work in conjunction with the 1st lien holder, making it less likely, but still 100% possible.

Jul 5th 2021
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