2nd Lien behind in payments

[Shearill Brown]

 I have a scenario I would like to run by you all. My fiance has a property she bought with an ex who is long gone. She has a 1st and a 2nd. When they split they made an agreement that she pay the 1st and he pay the 2nd. Well she has been paying the 1st and he hasn't on the second. Once she found out she tried to modify the 2nd and since she has good income she couldn't. Well know the 2nd is trying to foreclose and the house has some equity. The 1st is current and 2nd is behind quite a bit and house has some equity. Her credit it isn't good due to the home missing payments. What would you do in this scenario? Thanks

[Rick H.]

First issue: we're dealing with info about 3rd party and facts are sparse

Second issue: This is a national forum and well-intentioned but those unfamiliar with local CA laws weigh-in. There are some restriction to seller financing (disclosures) and sale of owner-occupied residential property in foreclosure.

Essentially, this woman ought to being trying to salvage some of her remaining equity and credit.

I started working Foreclosures in 1978 and most will do too little and too late to salvage much. 

It all starts with determining what the real ARV less cost of sale, cost of repairs, cost of all liens to determine max equity. Then, determine the burn rate the equity is decreasing due to interest, late fees, foreclosure (if any), taxes, HOA, etc. the burn rate is provably higher and faster than owner believes.

Equity can be traded for something else, too, such as a car, rent, note on another property, etc.