We have a 1st and 2nd mortgage on our home (80/20 split of original mortgage not a home improvement loan). Due to job loss and advise we received, we stopped paying both mortgages and are now in the foreclosure process with the 1st mortgage company. After complete silence for over a year from the 2nd mortgage company, they are now leaving notices to give them a call. Does the 2nd mortgage company also go through the foreclosure process or can they just file a judgement with the court and garnish wages?
Answer
In Ohio, the mortgage is not the obligation to pay. The note that you signed with the lender is the obligation to pay. The mortgage is only a possession interest in your property that secures the obligation to pay. A lender does not have to foreclose in order to collect. But a judgment for several thousand dollars is only a piece of paper unless it is secured by something like a mortgage. So the best practice for the lender would be to join in the foreclosure action and pursue its interests against you in the court where the other lender filed its foreclosure action.
It is not strictly necessary that the second lender join the foreclosure lawsuit, but it does not make sense for it not to. Further, there are some civil rules which state that claims for relief that arise out of the same common nucleus of fact should be joined in the same lawsuit. So there might be a defense to a second lawsuit by the second mortgage lender if it did not join in the foreclosure action (of which it would almost certainly have had notice since the first mortgage holder is required to put all of the other mortgage holders on notice.
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