That  depends on the current value of the property. If it is only worth $200k then only the 1st will receive money and 2nd lienholder is just spending money for no reason. Nowadays, the 2nd lienholder will sometimes simply settle for a fraction of what is owed through a loan modification program and write off the rest.  In addition, you must refer to state foreclosure laws. 2nd lenders will not take the property from you if there is no equity or  money to receive back. That is just false information. Maybe also look into a real estate lawyer too who is privy to your states laws.