Mortgage and cash loan MESS! Please help...?

A family is paying mortgage on a house. This family took out a cash loan in their name to help my friend, Scot for his business, and the same house is collateral again. Scot would pay the family, and the family would pay the bank.

Question is, is it possible to collateralize a house they're already paying a mortgage on? Is this what you call a second/junior mortgage?

The problem is Scot's business has failed and the family is defaulting on the cash loan since Scot has no way to make those payments. And this family is asking Scot to pay (lumpsum or installments) otherwise they'd lose the house. Does that sound legit? Am I missing something in this arrangement?

Scot has no way to pay right now, although he surely wants to pay them back, but I don't want them to give Scot some false scenarios. And Scot has no communication with the bank.

Thank you much!

Mortgage and cash loan MESS! Please help...?

Okay, here is the deal--

If they had a mortgage and they have decent credit and equity in the house, they could get a 2nd mortgage/equity line of credit. That line of credit is considered a 2nd mortgage and it is recorded on the deed just like the first mortgage was. They can indeed lose their house, either lender can decide to forclose on the house for missed payments. Usually what happens is the first mortgage holder buys out the 2nd and then forcloses on the house.

If they got a 2nd mortgage, they probably got a checkbook, so they could have written a check and gotten cash to give to Scott, but it was still a 2nd mortgage. Payments will be due just like the first mortgage, every month.

If they aren't getting enough to pay both, they should immediately contact the first lender and see if they can refinance with both their mortgage and the equity line of credit. This might be difficult because they have used all their equity in their house, so they are reborrowing for full value of the house and the bank might not go for it.

It would be terrible for these people to lose their home because they tried to help somebody out. I hope they can all find a solution.

They might also contact www.naca.com

It's a non-profit housing advocacy group and they do some refinancing. They are very much about people keeping their homes, so they might be able to help you where a bank might be less helpful.

Good luck!

Mortgage and cash loan MESS! Please help...?

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Mortgage and cash loan MESS! Please help...?

It sounds like %26quot;the Family%26quot; has a 1st mortgage and a 2nd mortgage. My advice to the family would be to refinance, if possible as soon as possible, just the balance of their existing mortgages into one loan. My reasoning for this is that i know that interest rates are a lot higher on 2nd mortgages and the combination might lower their overall mortgage payments. Scot might be a friend of the family and all but business is business. I would push him to get a loan HIMSELF to pay the family back. It is not fair for the family to lose their home over his failed business venture. Also I would advise him that if he cannot met his obligations as agreed, he would be responsible for any late fees or penalties that %26quot;the Family%26quot; might incur because of his delinquency. I would hate to see it go this far but i have seen it many times. Sue him in court for breach of contract/failure to pay.