In most cases of foreclosure, it is the first mortgage company that initiates the process. The second mortgage may file its own foreclosure in order to protect its interest in the property, but even this is somewhat uncommon. The second lender would much rather work with the homeowners to find a solution to avoid foreclosure entirely, if possible. However, if the homeowners are simply too far behind on the second mortgage but up to date on the first, there is a good chance that the second lender will declare foreclosure on the house.

Any lienholder can try to force a sale of the property through foreclosure, but usually only the first mortgage will get paid off through the proceeds of the sale. This is because there usually just are not enough proceeds at all for even the first lien to be paid in full, let alone extra ones after that. It just makes more sense for the second mortgage to try to work with the debtors to find a solution, since they would most likely not get anything from a sheriff sale. Especially with the declining real estate market right now, second mortgages may have loaned tens of thousands of dollars more than the home is currently worth, which guarantees they will not receive anything from a sheriff sale. County foreclosure auctions usually consist of very low bid amounts and few bidders, resulting in properties selling for far less than their current market values.

If a participant at the foreclosure auction placed a bid and won, the proceeds of the sale would be distributed like any other foreclosure, regardless of which mortgage company actually began the foreclosure process in the courts. The property taxes would be paid first, since the bureaucrats need to get their hands on the money as quickly as possible. Then the first mortgage would be paid off with as much of the proceeds as are left. Unfortunately for second mortgage companies and other junior lienholders, the winning bid at auction is usually not even enough to cover the entire first mortgage. In fact, most of the time it is one of the banks that bids on the property to ensure that they will be able to sell it after the foreclosure if there are no other bidders.

After the first mortgage is paid off in full, though, then any other liens, including the second mortgage, would be paid in order of when the lien was filed with the county recorder. If there is enough money to pay all of the second mortgage, then they get all of the rest of the money until their lien is paid in full. Then anything remaining goes to other liens or to the homeowners as their gain from the sheriff sale. If there is not enough to pay off the second mortgage (or even all of the first mortgage), then the second will not be paid off at all or in full. It will be up to the mortgage company to sue afterwards for a deficiency judgment after the foreclosure has ended (an unlikely occurrence).

Thus, just because it is a second mortgage who begins the process of foreclosure, it will not really change the order of how the liens are paid off through the foreclosure auction. Any bidder at sheriff sale, whether the bank or a third party, will still end up with a title that has had the liens on it discharged through the county foreclosure auction. And the homeowners will have to move out of the property at the appropriate time or be faced with the possibility of a forced eviction. No matter which mortgage company initiates the foreclosure, the process will move through the court system in exactly the same way.

If you have bad credit, but are trying to right the past wrongs there are only so many ways you can re-establish your credit. The simplest way to re-establish your credit is by credit card. Credit cards tend to be easy to get. This means that they will offer a card to almost anyone in order to make money. While this may seem a little odd, it is very true. They can make quite a bit from a risky venture on a credit card approval by the interest rate, so even if the person defaults they haven’t lost as much as they would have otherwise. This is also to your advantage. If you have bad credit and want to re-establish your credit then you can obtain a credit card for those with bad credit.

These types of credit cards will have a few undesirable aspects; however the end result is usually worth it. For example if you have a mortgage that you obtained after a bankruptcy that will help you establish credit again, but it is a slow process. Most of the mortgage companies will only help to raise your score a few points at a time, but with credit cards with bad credit you can raise your credit score in just a few months by significant points.

All you have to do with a credit card with bad credit is pay the bill on time. Just having the card is not enough. You need to have the card and use it for the credit score to rise quickly. For example you have the credit card and you use it once a month to buy gas, then two days later you pay off the balance on the card. This is going to raise your rate significantly because the credit card company is able to see you using the card, so they are happy and you are paying it off. If you were to keep a balance on the card it would also help as long as you make more than the monthly payment, but it is not as helpful as the first example. If you don’t use the card at all you will slowly have the credit score rise. Since you are not using it you are not establishing a payment pattern. This means you still pose a risk because if you do use it you may not pay off the balance.

The bad credit credit cards are fairly easy to obtain. You just need to find a bank that offers a card to anyone that has bad credit. Generally places like Wamu, Bank of America, Barclay’s and a few others are more than happy to offer this type of card. You will have a high interest, and the fees may be a little stringent, but you still get the card. You are also going to have to deal with universal default, which means the interest rate can rise with the slightest nick on your credit score.