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Generally, the 2nd doesn't foreclose because they are subject to the 1st loan which has to be satisfied in full before the 2nd gets a dime.
If a first mortgage is paid off or refinanced, an existing second mortgage would automatically fall into the position of first mortgage. If a first mortgage is being refinanced to take advantage of a lower interest rate, the second mortgage holder would typically have to sign an agreement to continue being subordinate to the new first mortgage being written.
What do you mean due date is 10-3-08 - is this some type of baloon payment?
As I previously outlined, the mortgage holder holding the 2nd mortgage becomes the 1st mortgage holder upon the refinance of the 1st. Once that happens the 2nd mortgage holder can then foreclose on the property and be in 1st position - meaning they get all their money first.
Well the 2nd would become the 1st upon the refinance of the 1st unless the 2nd would agree to stand in 2nd position.
When the 2nd becomes the 1st lien holder - they can foreclose and they get paid first before the refinanced loan.