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Q.What is the first action rule?
A.The first-action rule is a law that requires a lender in a secured loan transaction to foreclose on the security (here the real property) before seeking to recover the debt from the borrower by any other means. The first action rule applies unless (1) the property has become worthless to the lender as a practical matter or where a lender's junior lien has been extinguished by a prior foreclosure of a senior lien. This means a second or third mortgage lender will have to wait until the first, or senior mortgages, foreclose before they can sue the borrower for any deficiency. If the borrower continues to pay the first mortgage, the second is placed in a bad spot because if the second initiates foreclosure and there isn't sufficient equity in the property the first will likely get paid and the second won't.
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