Upcoming Foreclosures

New foreclosure law regarding more than one mortgages?

I have a friend who is unfortunately being foreclosed on with three mortgages on a single residency. He has a senior mortgage and two junior mortgages. According to current laws, I was informed that it is possible to end the foreclosure by settling only the senior mortgage (Either by refinancing or short-selling) and the two junior mortgages would become irrelevant (Completely eliminated where the lenders would have to write-off the loan as a loss) so as long as we settle the first mortgage. Is this true or in any ways possible? The house is located in Queens, NY.

Public Comments

1. I don't believe there is such a law that allows you just to deal with the first mortgage holder and kiss the juniors goodbye. The first lender would also tell you that this is not possible, unless you have the concurrence of the juniors and why would they give such assent, if there is nothing in there for them? If the first FORECLOSES, then the juniors have the right to either reinstate the loan and begin their own foreclosure. Obviously they will only do that if they believe there is adequate equity, so that they can get some or all their money back. If the juniors do not reinstate, then the house is sold at the foreclosure auction of the first and the juniors are out for good.