Foreclosure from a second position

[Nick B.]

Hello All!

I read an article by Dave Van Horn about a second position foreclosure:

http://www.pprnoteco.com/ezine-116-4-26-14/

In there he says that it may make sense to do so but does not elaborate on the outcomes. I asked him to comment on the article but he did not respond hence I am asking here.

What happens if:

• a property FMV is $200K
• 1st lien has UPB of $210K and is current
• 2nd lien has UPB of $20K and is more than 90 days late
• 2nd lien-holder files for a foreclosure
• now what?

I understand that the second lien-holder may start foreclosure process but what does he gain from it? If the property is sold for $200K shouldn't the first mortgage be satisfied first thus wiping second one off?

Thanks
Nick