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lots of tangled questions that cannot be answered in a simple post. Really need to contact a good attorney.
the second mortgage company can foreclose but they really only succeed in getting a judgement against you and potentially a different lien on the property. Their rights and claims are still junior to the first mortgage lien. If the property were worth $200,000 and the first mortgage is $10,000 and the second is $100,000 then they might press the case payoff the first and foreclose on the house... All perfectly legal...
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